This paper addresses two questions: What accounts for the gender gap in labour-market outcomes? What are the driving forces behind the changes in the gender labour-market outcomes over the period 1968–1997? It formulates a dynamic general equilibrium model of labour supply, occupational sorting, and human-capital accumulation in which gender discrimination and an earnings gap arise endogenously. It uses this model to quantify the driving forces behind the decline in the gender earnings gap and the increase in female labour-force participation, the proportion of women working in professional occupations, and hours worked. It finds that labour-market experience is the most important factor explaining the gender earnings gap. In addition, statistical discrimination accounts for a large fraction of the observed gender earnings gap and its decline. It also finds that a large increase in aggregate productivity in professional occupations plays a major role in the increase in female labour-force participation, number of hours worked, and the proportion of females working in professional occupations. Although of less importance, demographic changes account for a substantial part of the increase in female labour-force participation and hours worked, whereas home production technology shocks do not.

We develop a pure moral hazard model, and a closely related hybrid one, where there are both hidden actions and hidden information, to derive the restrictions from optimal contract theory that characterize set identification. In pure moral hazard models, the expected utility of managers is equalized across states, whereas in a hybrid model the optimal contract equates the expected utility of truth telling with the expected utility of lying. These restrictions are testable. Our identi…cation analysis establishes sharp and tight bounds on the identified set. Our tests and estimators are based on these bounds. We apply semiparametric methods to test the models, estimate the structural parameters, and quantify the effects of hidden actions versus hidden information. The pure moral hazard model is rejected on a large panel data set measuring the compensation of chief executive officers and the …financial and accounting returns of the publicly traded …firms they manage. We do not, however, reject the restrictions of the hybrid model, and our structural estimates for that model show the degree of private information varies considerably across sectors and over fi…rm size.

We estimate a principal-agent model of moral hazard with longitudinal data on firms and managerial compensation over two disjoint periods spanning 60 years to investigate increased value and variability in managerial compensation. We find exogenous growth in firm size largely explains these secular trends in compensation. In our framework, exogenous firm size works through two channels. First, conflicts of interest between shareholders and managers are magnified in large firms, so optimal compensation plans are now more closely linked to insider wealth. Second, the market for managers has become more differentiated, increasing the premium paid to managers of large versus small firms. (JEL D82, L25, M12, M52)

Fewer women than men become executive managers. They earn less over their careers, hold more junior positions, and exit the occupation at a faster rate. We compiled a large panel data set on executives and formed a career hierarchy to analyze mobility and compensation. We find, controlling for executive rank and background, that women earn higher compensation than men, experience more income uncertainty, and are promoted more quickly. Among survivors, being female increases the chance of becoming chief executive officer. The unconditional gender pay gap and job-rank differences are primarily attributable to female executives exiting the occupation at higher rates than men.

ABSTRACT This paper investigates the effects of regulatory interventions on contracting relationships within firms by examining the impacts of the Sarbanes–Oxley (SOX) Act on CEO compensation. Using panel data of the S&P 1500 firms, it quantifies welfare gains from a principal–agent model with hidden information and hidden actions. It finds that SOX: (1) reduced the conflict of interest between shareholders and their CEOs, mainly by reducing shareholder loss from CEOs deviating from their goal of expected value maximization; (2) increased the cost of agency, or the risk premium CEOs are paid to align their interests with those of shareholders; (3) increased administrative costs in the primary sector (which includes utilities and energy) but the effect in the other two broadly defined sectors, services and consumer goods, was more nuanced; and (4) had no effect on the attitude of CEOs toward risk.

This paper develops a generalized Roy model with human capital accumulation, moral hazard, and career concerns. We identify and estimate the model with a large panel that matches data on publicly listed firms to information on their executives. The structural estimates obtained are used to decompose the firm‐size pay gap. We find that although total compensation and incentive pay increase with firm size, certainty‐equivalent pay decreases with firm size. In larger firms, and for more highly ranked executives, weaker signal quality about effort results in higher risk premiums. This risk premium accounts for roughly 80 percent of the firm‐size gap in total compensation. Larger firms are also willing to pay more than smaller ones to attract executives. Finally, the estimated coefficients on human capital accumulation from formal education and experience gained from different firms are individually significant, but their collective effect on firm‐size pay differentials nets out.

An empirical approach to optimal income taxation design is developed within an equilibrium collective marriage market model with imperfectly transferable utility. Taxes distort time allocation decisions, as well as marriage market outcomes, and the within household decision process. Using data from the American Community Survey and American Time Use Survey, we structurally estimate our model and explore empirical design problems. We allow taxes to depend upon marital status, with the form of tax jointness for married couples unrestricted. We find that the optimal tax system for married couples is characterized by negative jointness, although the welfare gains from jointness are modest. These welfare gains are then shown to be increasing in the gender wage gap, with taxes here, as in the case of gender based taxation, providing an instrument to address within household inequality.