Abstract:
Women labor force participation varies widely: in Pakistan one worker in five is a woman, in Sweden every other worker is. We study the effect of these differences on the misallocation of talent. To do so we first show that selection into the labor force is positive, namely, the hgiher the barrier the more able the women who work and then use personnel data of a global MNE to estimate a structural model of pay setting within the firm, allowing the parameters to respond to local conditions. We show that the average ability of women in the workforce is higher than men’s and the ratio is largest where LFP is lower. We quantify the role of social norms and discuss policy alternatives

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