This paper presents a simple model of self-fulfilling expectations by firms and households that generates multiplicity of equilibria in pay and time allocation for ex-ante identical household partners. Multiplicity arises from statistical discrimination in the provision of training by firms to male and female workers, rather than from incentive problems in the labour market. Firms´ beliefs about differences in spouses´ reactions to household shocks
lead to symmetric (ungendered) and asymmetric (gendered) equilibria. We find that: (i) the ungendered equilibrium can become a unique equilibrium as the economy becomes more
productive (regardless of the generosity of family aid policies), (ii) the ungendered equilibrium could yield higher welfare than the genderered one under some scenarios, and (iii) gender-neutral job subsidies are more effective that gender-targeted ones in removing the gendered equilibrium. Empirical evidence based on time use surveys for three European countries yields some support for these implications. |
