create gender equality) is approximately 35 percent in the region, and even higher when using 3-digit occupational codes. Women are over-represented in the service and managerial occupations while men dominate in manufacturing and professional fields (Cunningham and Jacobsen 2004). Occupational choice may be due to discrimination at some time over the life cycle, or based on family decision and competing time demands in future life.

**_Men earn more than women, but the wage gap is rapidly shrinking_ :** By 1997, women’s median hourly wage was higher than men’s in Argentina and Costa Rica, and was 90 percent of men’s hourly wage in several other countries.  While monthly wage gaps show a larger gap, it is important to note that women work approximately 1/3 fewer hours per month as men.  Very little of the wage gap can be attributed to differences in observable characteristics.  Working women and men are approximately the same age and have similar levels of education.  Instead, the wage gap is almost fully due to unobservable characteristics, which may include everything from discrimination (Oaxaca 1973) to incentives created by legislation (Haro, unpublished) to self selection (Akerlof and Kranton 2000) to occupational preferences (Cunningham and Jacobsen 2004) to unobserved differences in job experience (Blau 1998) to “personal choices made outside the work environment” (Furchtott-Roth and Stolbs 1999).  Blom and Azevedo find no evidence of differences in training received by gender in any occupation. There is evidence of potential greater pay discrimination at the higher salary jobs at any given skill level. Montenegro (2001) shows that in Chile the gap increases as women move up along the earnings distribution, going from 10 percent in the bottom part of the distribution to about 40 percent in upper part.

**Future Work:** Potential areas for future work in understanding the importance of gender in the labor market include:

- **<u>Identifying the sources of the unobserved portion of wage gaps.</u>** To improve wage equity, particularly as education attainment rates converge, it is necessary to better understand those factors that cause persistent wage gaps.  Labor market data that are commonly collected are not sufficient, since they do not include information on the most likely causes of the observed gap:  differences in actual, as opposed the generally measured potential level of labor market experience, differential accumulation of human capital due to differential school experiences, the role of household responsibilities, occupational choice decisions, labor turnover, differential preferences by gender, skill obsolescence and employer preferences, to name a few.

- **<u>The role of the informal sector</u>** <u>.  The differential participation rates in these sectors begs the</u> question of whether the attractive characteristics of informal sector work for women can be (or need be) replicated in the monitored and more protected formal sector.  This requires a better understanding of the motivation for informal sector work – an area that sociologists have much to teach economists

- **<u>Labor legislation.</u>** There is virtually no discussion of the incentives created for employees and employers via labor legislation.  However, anecdotal evidence suggests that sex-specific labor legislation actually creates incentives to discriminate against women (with parallel, but much fewer, distortions for men).  A more careful consideration of the laws in order to even the cost between male and female workers, could improve equity in labor markets.

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