Why does the schooling gap close while the wage gap persists across country income comparisons?

• Published in: Journal of economic dynamics & control 2024-02, Vol.159, p.104805, Article 104805
• Main Authors: Karapanagiotis, Pantelis, Reimers, Paul
• Format: Article
• Language: English
• Subjects: Development; Education; Gender gaps; Labor; Structural change
• ISSN: 0165-1889; 1879-1743
• DOI: 10.1016/j.jedc.2023.104805

The schooling gap diminishes because the services sector becomes more pronounced for high-income countries, and the paid hours gap closes. Although gender wage inequality persists across country income groups, differences in schooling years between females and males diminish. We assemble a novel dataset, calibrate a general equilibrium, multi-sector, -gender, and -production technology model, and show that gender-specific sectoral comparative advantages explain the paid hours and schooling gap decline from low- to high-income economies even when the wage gap persists. Additionally, our counterfactual analyses indicate that consumption subsistence and production share heterogeneity across both income groups and genders are essential to explain the co-decline of the schooling and paid hours gaps. Our results highlight effective mechanisms for policies aiming to reduce gender inequality in schooling and suggest that the schooling gap decline and the de-invisibilization of female paid work observed in high-income countries are linked by structural sector movements instead of wage inequality reductions.