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.

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.