SSE/EFI Working Paper Series in Economics and Finance,
Stockholm School of Economics

Abstract: This paper identifies the pertinent institutions governing the structure of payoffs with regard to female career progression. Drawing on recent insights in behavioral economics, we hypothesize that interactions between psychological mechanisms and the institutional setup may be important determinants of cross-country differences in the level and evolution of female representation on executive positions in the business sector. We test this proposition informally by exploring whether it can be used to account for some of the observed differences between Sweden and the US in this respect. Our normative conclusion is that institutional reforms aimed at increasing female representation should take into account the role of psychological mechanisms in determining career choices and how these mechanisms are affected by relevant institutions such as the level of personal taxes, rules for parental leave, child care and wage-setting arrangements. Throughout the strong path dependence in career choice and career progression is emphasized.

Keywords: Career choice; Career incentives; Gender equality; Parental leave; Household production

JEL-codes: D13; D63; J16; J20; M52

34 pages, First version: December 13, 2004. Revised: January 25, 2007. Earlier revisions: January 27, 2005, July 12, 2005, July 12, 2005, July 28, 2005, September 26, 2005.

Note: http://www.ifn.se/eng/people/research_fellows/mh/recent_publications_in_english_1

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