DP2378 Mommy Tracks and Public Policy: On Self-Fulfilling Prophecies and Gender Gaps in Promotion
Consider a model with two types of jobs. The profitability of promoting a worker to a fast-track job depends not only on his or her observable talent, but also on incontractible effort. We investigate whether self-fulfilling expectations may lead to women meeting tougher promotion standards than men. If employers expect women to do more household work than men and by that exert less effort in the paid job, the more talented she must be to make promotion profitable. Moreover, specialization in the family will then make women do most of the household work. Such self-fulfilling prophecies can be broken: Both affirmative action and family policy can make women spend more effort in the market, which can lead the economy to a non-discriminatory equilibrium. However, we find that it is unlikely that temporary policy can move the economy to a symmetric equilibrium; policy must be made permanent. Anti-discrimination policy need not enhance efficiency, and from a distribution viewpoint this is a policy with both winners and losers.
