Gender differences in competition: gender equality and cost reduction policies

Abstract

This paper investigates the implications of the unequal division of the domestic labor in men and women’s participation and effort incentives in competitive relations, in which the labor market is the main example. We found that moderate levels of affirmative action (i.e., bias in favor of women) incentivize men and women to exert more effort and women’s participation. However, it cannot guarantee full participation and equal effort among men and women without inducing economic inefficiency or even distorting the labor market. Given these limitations, we consider the effects of an alternative policy that supports the men’s involvement in the domestic tasks. The main conclusion is that if we want men and women to have the same opportunities in the labor market, we must solve the household problem first. While women hold a larger share of the domestic labor, they are in a weaker position to compete with men. We expect that our findings will guide researchers and decision-makers implementing effective policies that can allow men and women to have the same labor market opportunities. Keywords: Gender equality; Affirmative action; Cost reduction policies; Efficiency; Women participation. JEL classification: J16, J78, D63, C72.