Structural change and the narrowing gender gap in wages: theory and evidence from Hong Kong

This paper offers a theoretical and empirical analysis on the sources of the narrowing gender gap in wages. Based on some existing literature, the model posits that the narrowing gender gap may be related to women’s changing comparative advantage and the gender gap is smaller in occupations in which physical labor is less intensively used. The model implies that when an economy transforms from a manufacturing-oriented economy to service-oriented economy, a woman’s productivity relative to a man’s will generally increase so that the gender gap narrows. The implications of the theoretical analysis are then tested based on 1% random sub-samples of two population censuses. The empirical results support the predictions of the model. D 2003 Elsevier Science B.V. All rights reserved. JEL classification: J16; O12