Economic consequences of eliminating gender discrimination in the labor market

Theoretical and empirical literature on labor market discrimination is extensive on showing persistent wage gaps across genders at individual level. However, at the aggregate level, the economic consequences of gender discrimination remain unclear. In this article, economic consequences of gender discrimination are estimated through interacting a wage decomposition model (individual) and an input–output model (aggregated level). Using the decomposition’s results, it was possible to calculate individual wage adjustments, so that all individuals are remunerated according to their observable characteristics as well as the group of non-discriminated individuals. In turn, these estimates were used to simulate changes on labor nominal costs (price effect) and consumption (income effect). Our results indicate that the income effect generated through consumption overcomes the price effect, raising production (0.90%), welfare (2.70%) and employment (0.94%). Nonetheless, the results are very heterogeneous across sectors and households.