The Persistence of Gender Inequality: Evidence from Labor Market Reactions to Bank Deregulation

Abstract

Do gender pay gaps transform into more covert forms of gender inequity in the labor market? Exploiting divergent industrial responses to U.S. bank deregulation, we document how industrial differences in credit access propel this transformation. This is because in less equitable industries (where we show new entry is limited and incumbents increase R&D investments), credit increases rents, which disproportionately benefit male workers. In response, equitable industries (where we show credit increases competition) shift labor demand towards women. These divergent industrial responses in net reduce the gap, but also exacerbate sorting across industries, accentuate workplace gender bias, and make female wages vulnerable to credit contractions. Gender inequities, thus, transform rather than disappear.