Wealth, Wages, and Wedlock: Explaining the College Gender Gap Reversal

• Date: 01 April 2018
• Published date: 01 April 2018
• DOI: http://doi.org/10.1111/sjoe.12233

©The editors of The Scandinavian Journal of Economics 2017.

Scand. J. of Economics 120(2), 537–562, 2018

DOI: 10.1111/sjoe.12233

Wealth, Wages, and Wedlock: Explaining the

College Gender Gap Reversal*

Laurie S. M. Reijnders

University of Groningen, NL-9747 AE Groningen, The Netherlands

l.s.m.reijnders@rug.nl

Abstract

In this paper, I study the role of changes in the wage structure and expectations

about marriage in explaining the college gender gap reversal. With strongly diminishing

marginal utility of wealth and in the presence of a gender wage gap, single women have

a greater incentive than single men to invest in education. Marriage-market distortions

tend to depress the overall benefit of education for women relative to men. I develop

a tractable two-period model and parameterize it using US census data for the cohort

born in 1950. I then show that it can generate a reversal and that the most important

driving force for this is the decline in marriage rates.

Keywords: Education; gender wage gap; home production; marriage

JEL classification:D13; I24; J12

I. Introduction

Over the last decades, women have caught up with men in many domains,

but nowhere has the change been so striking as for college education. Not

only did they manage to close the gap, nowadays women even graduate

in larger numbers in most developed countries. This is known as the

“college gender gap reversal” (see Goldin et al., 2006). To illustrate this

phenomenon for the United States (US), Figure 1(a) plots the fraction of

females and males who have completed four years of college or more

at the age of 40 by birth year. Whereas in the 1950 cohort about 30

percent of the men obtained a college education versus 25 percent of

the women, by 1970 the fraction of educated women had surpassed that

of men. The same pattern shows up in the enrolment rates for tertiary

education (see Figure 1(b)). Both in the US and for the European Union

*An earlier version of this paper, entitled “The College Gender Gap Reversal: Insights from a

Life-Cycle Perspective” appeared as SOM Research Report 14006-EEF. I thank the participants

of the 2014 Overlapping Generations Days in Paris and of the 2015 Workshop on Families

and the Macroeconomy in Edesheim for valuable comments. Financial support from the Dutch

Science Foundation (NWO) is gratefully acknowledged (grant number 453-14-012).

538 Explaining the college gender gap reversal

(a) College graduates in US (b) Tertiary enrolment in US and EU

Fig. 1. The college gender gap reversal

Sources: (a) Integrated Public Use Microdata Series for 1970–2010; (b) United Nations Educational, Scientific

and Cultural Organization (UNESCO) Institute for Statistics.

(EU) countries, the ratio of female to male enrolment has increased over

time and nowadays exceeds 100 percent.

In this paper, I study the role of changes in the wage structure and

expectations about marriage in explaining this phenomenon. I develop

a tractable two-period model with the following main features. First,

individuals differ in their talent for schooling and thereby the utility

cost that they have to incur when pursuing higher education. Second,

there is a gender wage gap in the sense that women earn less than

equally qualified men. I assume that men and women are the same in

all other respects, including a common college wage premium. Third,

individuals derive utility from a consumption good that is produced using

time and market goods. The wage that they can earn in the market is

the opportunity cost of the time spent at home. Finally, in the second

period of life, some individuals get married while others stay single. The

probability of marriage and the degree of sorting are exogenous, but

matching probabilities are determined in equilibrium.

I show that all individuals whose utility cost of schooling is below a

certain gender-specific threshold decide to get educated. This threshold

value can be decomposed into two main components: a labour-market

benefit of education and a distortion due to the possibility of marriage. I

prove analytically that the labour-market benefit of education for women

can be higher than for men if there is a sufficient amount of curvature in

the utility function. Intuitively, this is because women earn lower wages,

and with strongly diminishing marginal utility of wealth, they have more

to gain by increasing their lifetime earnings through obtaining a college

degree. The distortions caused by the marriage market tend to depress the

overall benefit of education for women relative to men, as they expect to

marry a more wealthy spouse and to spend more time on home production.

©The editors of The Scandinavian Journal of Economics 2017.