The solution [to the gender wage gap] does not (necessarily) have to involve government intervention. It does not have to improve women’s bargaining skills and desire to compete. And it does not necessarily have to make men more responsible in the home (although that wouldn’t hurt). But it must involve alterations in the labor market, in particular changing how jobs are structured and remunerated to enhance temporal flexibility. The gender gap in pay would be considerably reduced and might even vanish if firms did not have an incentive to disproportionately reward individuals who worked long hours and who worked particular hours. Such change has already occurred in various sectors, but not in enough.

. . . .the impact of hours on the gender gap is large and goes far to explain much of the gender earnings gap. Individuals who work long hours in these occupations receive a disproportionate increase in earnings.

. . . .At the start of their careers, earnings by gender are almost identical among MBAs graduating from the University of Chicago Booth School from 1990 to 2006. But after five years, a 30 log point difference in annual earnings develops and at 10 to 16 years after the MBA, the gender gap in earnings grows to 60 log points (that is, women earn 55 percent what men do). Three factors explain 84 percent of the gap. Training prior to MBA receipt, (e.g., finance courses, GPA) accounts for 24 percent. Career interruptions and job experience account for 30 percent, and differences in weekly hours are the remaining 30 percent. Importantly, about two-thirds of the total penalty from job interruptions is due to taking any time out.

At 10 to 16 years from MBA receipt, 23 percent of University of Chicago Booth School MBA women who are in the labor force work part-time and, interestingly, more than half of those working part-time employ themselves. Around 17 percent are not currently employed and 60 percent work full-time (51 percent do of those with children). Cumulative time not working is about one year for all women 10 to 16 years after the MBA.

Not surprisingly, children are the main contributors to women’s labor supply changes. Women with children work 24 percent fewer hours per week than men or than women without children. The impact of children on female labor supply differs strongly by spousal income. MBA moms with high-earning spouses have labor force rates that are 18.5 percentage points lower than those with lesser-earnings spouses. They work 19 percent fewer hours per week (when working) than those with spouses below the high-income level. The impact of higher income husbands may be a pure income effect but it more likely results from a combination of an income and a substitution effect in which the family requires some parental home time and the high-flyer husband offers little.

. . . .The gender gap in earnings between male and female JDs, graduating from the University of Michigan Law School from 1982 to 1991, is nil at the start of employment. The gap is small and insignificant at year 5, after controlling for hours, weeks and time off. . . .But as in the case of the MBAs the gap balloons to around 55 log points by year 15 in a longitudinal sample. . . .The remaining gap at year 15 is reduced to around 22 log points when time worked during the year is included and to 13 log points once work absences and job tenure are added. . . . As in the case of MBAs, the reason for the reduction in hours of work at 15 years out is largely due to the arrival of children. And also similar to the MBA case is that the decrease in participation is due to an interaction between children and the income of the spouse. About 16.5 percent of JD women, and 21 percent of those with children of any age, are not in the labor force by year 15.

. . . .Data for MBAs and JDs shows large increases in gender pay gaps with time since graduation and also reveals the relationship between the increasing gender pay gap and the desire for time flexibility due to the arrival of children. Lower hours mean lower earnings in a nonlinear (convex) fashion. Lower potential earnings, particularly among those with higher-earning spouses, often means lower labor force participation.