The role of gender in employment polarization

We document that U.S. employment polarization in the 1980–2017 period is largely generated by women. In addition, we provide evidence that the increase of employment shares at the bottom of the skill distribution is generated in market sectors producing services representing home production substitutes. We use a calibrated macroeconomic model to show that a rising skill premium induces high-skilled women to participate more in the labor market, reduce home working hours, and demand more home substitutes in the market, thus fostering a rise in employment shares at the bottom of the skill distribution. Counterfactual experiments suggest that without the large increase in the skill premium of high-skilled women, employment polarization would have been substantially reduced, and changes of employment shares at the bottom of the distribution would have been negative.