Does the Gender Composition of an Occupation Affect Wages?

Abstract:

We analyze whether an increase in the female share of an occupation causally leads to lower relative wages for both male and female workers in that occupation by exploiting the natural experiment of German reunification as an exogenous shock to female shares. When the Berlin Wall fell, East German women were not only more likely to participate in the labor market than their West German counterparts, but were also distributed differently across occupations. Using the gendered potential labor supply shock in an occupation caused by reunification as an instrument for the change in the actual gender composition in the West before and after reunification, we document that an increase in the female share causally leads to lower wages for both men and women working in the respective occupation. The evidence is in line with the “devaluation hypothesis” developed in the sociological literature.