| Abstract: |
The main aim of this work is to explain the Chilean gender wage gap using a
dynamic monopsony model to estimate the labor supply elasticities at the firm
level. Our results suggest that the elasticities of labor supply to firms are
small, which implies that firms have labor market power. We also found that
depending on the especification, Chilean men would earn approximately 19% -
28% more than women as a result of the difference in labor supply elasticities
by gender, ceteris paribus. Furthermore, we find that in the long run, the
magnitude of between-firm differences in elasticities are higher than
within-firm differences, which suggests that the gender wage gap is driven by
structural factors that generate gender sorting to firms. Finally, using the
same methodology, we find that the elasticities for a high-income countries
(e.g. the United States) are higher than those obtained for a middle-income
country (e.g. Chile) for both men and women, which suggests higher labor
market frictions in middle-income countries. The main difference between USA
and Chile comes from the low labor supply elasticity of Chilean women, which
appears to be explained from their low recruitment elasticity from
nonemploeyment. |