Do Gender Disparities in Employment Increase Profitability? Evidence from the United States

This paper investigates whether the contribution of the declining share of wages in national income to the upswing in profitability between 1982 and 1997 in the United States was aided by the growing incorporation of women into employment. The analysis finds that women helped moderate the decline in the aggregate wage share. The reduction in gender pay disparity overwhelmed the negative effect of women's growing share of market work on the wage share. However, in (one-digit) sectors where wage shares fell, women did not contribute to restraining the fall, indicating that the aggregate outcome was the net result of distinct sectoral trends in women's employment conditions. We argue that the perverse process of labor productivity falling faster than the real wage in the service sector may have played a key role in shaping the aggregate outcome. The post-1997 trends in the US are discussed in a postscript.