Maria Frech, TSE

Paper: Uniform Contracts and Unequal Flexibility Needs – A Theory of Gendered Employment Dynamics

Abstract: Persistent gender disparities in wages and employment remain despite formally equal labor markets. Empirical evidence highlights women’s greater need for flexible working hours as a central explanation. We propose a theory in which the interaction of uniform work arrangements and stochastic, unverifiable shocks to time availability endogenously generates gendered labor market dynamics. We develop a dynamic contracting model between an employer and an employee in which men and women differ only in their probability of low time availability, disciplined using the American Time Use Survey. When contracts are tailored to workers’ flexibility needs, flexibility shocks generate individual wage fluctuations but no systematic gender differences over the life cycle. When the employer has to offer a uniform contract to both genders, the model endogenously gives rise to well-documented gendered labor market outcomes: (i) the divergence and non-convergence of gender earnings differentials over the life cycle, and (ii) women’s shorter job duration and weaker labor-force attachment. The model highlights a tension between formal equality and how work contracts can insure women against flexibility needs.