Labor Market Signaling and Self-Confidence: Wage Compression and the Gender Pay Gap

Details

Serval ID
serval:BIB_6265A29A63EC
Type
Article: article from journal or magazin.
Collection
Publications
Institution
Title
Labor Market Signaling and Self-Confidence: Wage Compression and the Gender Pay Gap
Journal
Journal of Labor Economics
Author(s)
Santos Pinto L.
ISSN
0734-306X
Publication state
Published
Issued date
10/2012
Peer-reviewed
Oui
Volume
30
Number
4
Pages
873-913
Language
english
Abstract
I extend Spence's signaling model by assuming that some workers are overconfident-they underestimate their marginal cost of acquiring education-and some are underconfident. Firms cannot observe workers' productive abilities and beliefs but know the fractions of high-ability, overconfident, and underconfident workers. I find that biased beliefs lower the wage spread and compress the wages of unbiased workers. I show that gender differences in self-confidence can contribute to the gender pay gap. If education raises productivity, men are overconfident, and women underconfident, then women will, on average, earn less than men. Finally, I show that biased beliefs can improve welfare.
Web of science
Create date
27/08/2012 16:58
Last modification date
20/08/2019 14:19
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