Female Labor Supply and Earnings Inequality Under Skill-Biased Technological Change

Sammanfattning: The gender education gap has reversed, women today account for the majority of college graduates. At the same time, skill-biased technological change strongly rewards highly-educated workers through the increased skill premium. In this thesis, I analyze the implications of combining these two facts through a heterogeneous agent model using U.S. data from 1964 to 2018, in which agents differ in terms of gender and education. Extending the model of Caselli and Coleman (2006), I first investigate how firms shift their production towards more skilled-labor-efficient technologies over time. I find that a decrease of the relative price of skilled labor productivity over time is needed to generate a skill premium growth. Next, I show that the model fits the data on labor supply and both intra- and inter-household earnings inequality very well. Then, four potential explanations for the sharp increase of female labor supply in the last century are tested: Decreasing home production hours, assortative matching, rising female education and skill-biased technological change. The results show that the great changes in time use, enabled in larger part by more effective home production technology, are the most important factor for female labor supply and intra-household inequality. Lastly, a counterfactual analysis is conducted to determine whether these model results differ between married and cohabiting households, which they do as cohabiting women work more and have higher relative earnings compared to married women.