Monday, April 30, 2007

Why Women are Paid Less than Men

Examine Reasons Why Women's average wage is Less than Men's average wage.

  • In US. The National Committee on Pay Equity used the occasion to announce that among full-time workers, women make only 77 cents for every dollar paid to men. (1)
  • In UK the gender pay gap is 12.6% (down from 17% in 1997) (2)
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 be even pay lower wages for same job.

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

4. Women take Career Breaks to Have Children.

UK Maternity law means a 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 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 do "male dominated jobs". This is due to changing social changes, and changing educational standards. But, this remains one of the most significant factor for explaining wage differentials between men and women.

6. Different Types of Jobs

Women more likely to have part time / temporary jobs. in the service sector, these jobs are lower paid because firms often have 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 replied "There are certainly instances of discrimination, she says, but most of the gap is the result of different choices. Other hard-to-measure factors, Goldin thinks, largely account for the remaining gap -- "probably not all, but most of it."

More on: Labour Market Economics


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

(3) Wage Gap amongst Male and female Engineers


EdDY said...

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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.