Psychological bias and gender wage gap

Basing our work on the literature on psychology that highlights differences in confidence levels between men and women, we provide a rationale for the simultaneous existence of the two dimensions of the gender wage gap: (i) on average, men earn more than women and (ii) the difference in wages depends on the gender structure. We also argue that although an equal compensation policy does not eliminate the gender wage gap, it nonetheless increases social welfare. Finally, endogenizing the choice of task by agents, we show how women, in a vast majority, can self-select on low paying jobs.