An Economic Theory of Glass Ceiling
48 Pages Posted: 23 Apr 2009 Last revised: 9 Nov 2009
Date Written: March 30, 2009
In the "glass ceiling" debate there appear to be two strongly held and opposing interpretations of the evidence, one suggesting it is really the result of gender differences and the other that there is discrimination by gender. This paper provides an economic theory of the glass ceiling and one of the main insights of our analysis is that in some real sense these two interpretations are not in conflict with each other. The glass ceiling emerges as an equilibrium phenomenon when firms compete a la Bertrand even though employers know that offering women the same contract as men would be sufficient to erase all differences among promoted workers. The model also provides new insights into anti-discrimination policy measures.
Keywords: Glass Ceiling, Promotions, Career Options
JEL Classification: J16, D82
Suggested Citation: Suggested Citation