Gender Discrimination, Human Capital, and Marriage

We use a household bargaining model to provide a rationale for gender discrimination in pay to disappear. In societies where women have a credible outside option to marriage and have the right to bargain with their future husband over the benefits of their union, the elimination of gender discrimination in pay is likely to come as a Pareto improvement. If educated women face discrimination in the labor market, they may exploit their biological comparative advantage in child-bearing to extract a high enough compensatory transfer from their male partner, in exchange for the right to share custody of children. Anticipating this, men will have a vested interest in supporting the elimination of gender discrimination in pay exists, it is likely that many women's rights including the right to start their own business are still violated.