Tuesday, April 30, 2013

Why Women are Paid Less than Men

On average, women receive lower pay than men.
  • In US. The National Committee on Pay Equity stated among full-time workers, women make only 77 cents for every dollar paid to men. (1)
  • In UK, the gender pay gap is 10% (down from 17% in 1997) (Gender Pay Gap
  • This gender pay gap does not necessarily mean women receive less pay for the same job. The primary reasons for wage differentials are the different kinds of jobs women have compared to men.
Reasons for Wage differentials include:

1. Level of Skills

Skills and qualifications are an important factor in determining wages. If men had better qualifications, this could explain their higher wages. With regard to A-levels and university degrees, female qualifications are generally as good as men. However, for certain high paying professions, such as accountancy and law, there are more qualified men than women, although even this gap is now closing.

2. Differences in Productivity

According to MRP theory, it is a workers productivity (MRP) that determines wages. In heavy manufacturing, male productivity is likely to be higher. However, now that the economy is mostly service sector, this argument is only applicable to a small % of jobs.


3. Discrimination

Lower wages for women could be due to discrimination. Employers may be less willing to promote women; they may even pay lower wages for the same job.

In theory, sex discrimination, in the labour market, is outlawed by the Sex Discrimination Act 1976. However, in practice it can be difficult to prove, especially with regard to promotion - if a woman isn't promoted, is it really discrimination or something else?

4. Women take Career Breaks to Have Children

UK Maternity law means women can be secured of her job, whilst having a child. However, taking a break from work means women are less likely to get promoted. Also, women of childbearing age, may be viewed as a liability. This is because if they become pregnant, the firm has to pay the cost for maternity leave and find somebody to fill the temporary gap. For small firms, this can be a significant cost. This reason is quite significant, although, many women are choosing to have children later in life - if at all.

5. Women Choose Lower Paying Jobs

Traditionally it has been argued women choose lower paid jobs like nursing, childcare. These are lower paid than other careers such as lawyers, and accountants. However, traditional job patterns are changing, women are increasingly choosing to do "male dominated jobs". This is due to changing social expectations and changing educational standards. But, it still remains one of the most significant factors for explaining wage differentials between men and women.

6. Different Types of Jobs

Women are more likely to have part-time / temporary jobs. In the service sector, these jobs are lower paid because firms often have a degree of monopsony power. Women also have lower travel time. In order to look after children, they need jobs closer to the home; this limits the range of jobs available.

Harvard economist Claudia Goldin stated "There are certainly instances of discrimination, but most of the gap is the result of different choices. Other hard-to-measure factors ... probably not all, but most of it."

More on: Labour Market Economics

References:

(1) Women's Pay Gap explained
(2) Women and Equality Unit:

(3) Wage Gap amongst Male and female Engineers 
Economics of discrimination

4 comments:

EdDY said...

I luv u so much sir ! really thank you for the post !

Anonymous said...

From what I've prevously read, the 23% wage gap actually refers to the amount women are paid vs. the amount men are paid WHEN THEY ARE DOING EQUIVALANT JOBS. Therefore, the women chosing lower paying jobs section of this is really not relevant.

Anonymous said...

what the person said above is rubbish

Anonymous said...

This makes sense. Women are far more likely to raise children and take care of the elderly in their family. This means that if an employer had to call an employee into work, the male counterparts would be more often able to do so. Or if time off for personal reasons was needed, it'd more likely be female. How anyone could expect such risks not to be translated into wages, is beyond me.