Joan Robinson Meets Harold Hotelling: A Dyopsonistic Explanation of the Gender Pay Gap

This paper presents an alternative explanation of the gender pay gap resting on a simple Hotelling-style dyopsony model of the labor market. Since there are only two employers equally productive women and men have to commute and face travel cost to do so. We assume that a fraction of the women have higher travel cost, e.g., due to more domestic responsibilities. Employers exploit that women are less inclined to commute to their competitor and offer lower wages to women. Since women’s labor supply at the firm level is for this reason less wage-elastic, this model presents an explanation of wage discrimination in line with Robinson (1933).