Frech, Maria and Maideu-Morera, fGerard (2024) The Hidden Demand for Flexibility: a Theory for Gendered Employment Dynamics. TSE Working Paper, n. 24-1588, Toulouse

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Abstract

Empirical evidence highlights women’s demand for flexible working hours as a crit-ical cause of the persistent gender disparities in the labor market. We propose a theory of how hidden demand for flexibility drives gendered employment dynamics. We de-velop a dynamic contracting model between an employer and an employee whose time availability is stochastic and unverifiable. We model men and women only to differ in their probability of having low time availability, which we measure in the ATUS. We explore contracts designed specifically for each gender (gender-tailored) and the polar case where a male-tailored contract is given to both men and women. For the latter, we show that contracting frictions endogenously give 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.