Occupational Prestige and the Gender Wage Gap

Occupational segregation by gender remains widespread and explains a significant part of the gender wage gap. We shed light on the reasons why occupational segregation persists despite the increases in women's education and labor force participation, and why it results in a gender wage gap. Women express a stronger relative preference than men for occupations that are valuable to society, which we argue is captured by their occupational prestige. If women prefer occupations with higher occupational prestige, they will earn lower wages because of compensating wage differentials. Using conditional logit models of occupational choice, we find statistically significant support for this hypothesis. The effect is economically significant: the gender differences in the weights placed on prestige and wages can explain up to one half of the gender wage gap resulting from occupational segregation, or about one fourth of the overall gender wage gap. Our results are strongest for individuals with low ability, which suggests that social norms may be an important factor in generating these gender differences.