One Cohort at a Time: A New Perspective on the Declining Gender Pay Gap
Jaime Arellano-Bover, Nicola Bianchi, Salvatore Lattanzio, and Matteo Paradisi
Abstract:
We provide new insights on the decline of the gender pay gap from the 1970s until today, using data from multiple high-income countries. We find support for a cohort- driven interpretation of the shrinking pay gap: newer worker cohorts with smaller gender gaps gradually replaced older cohorts with larger gaps. We show that the cross- cohort decline in the gender gap in entry wages among younger workers accounts for the overall reduction in the gender gap at most until 2000. After 2000, the exit of older cohorts with larger gaps becomes the prominent driver of cross-cohort convergence. Next, we further examine the progressive reduction in the entry-pay gender gap among younger workers that stopped in 2000. Rather than stemming from younger women’s improved outcomes, it mainly originates from younger men’s absolute and relative (to women) earning losses. Finally, we show that changes across cohorts in initial allocations to firms help explain the decline in the overall gap, but this is not true of initial sector allocations. Overall, we conclude that the convergence achieved over the last two decades is mostly the slow-moving consequence of equality gains achieved decades ago, a realization that provides a pessimistic outlook for the future trajectory of the gender gap.