Abstract

Using data from universe of the German workforce, we document substantial misallocation of female workers across space. We show that i) conditional on their occupation, women live and work in cities that are less productive, ii) the bias toward less productive location-occupation pairs is particularly high among married women, and iii) counterfactually aligning the distribution of women with that of men, would increase average female wages modestly. To rationalize these facts, we extend the standard quantitative spatial model to include couples who use intra-household bargaining to decide on a joint location. We estimate the model using data from the Intefrated Employment Biograpies (IEB) of all German workers. Through the lens of the model, we show that couples are more responsive to wage shocks in the occupation of the man than in that of the women, which explains in part why married women end up in less productive cities. In general equilibrium, however, we show that removing couples’ gender-bias yields only modest wage increases for women. Further, removing joint household decisions, we see similar modest wage changes.