The Gender Pay Gap

The pay gap between men and women has fallen quite dramatically over the past 30 years though a sizeable gap still remains, but this headline figure masks some less positive developments in recent years. We are used to each generation of women making progress relative to the one before, but this process has slowed slightly with the better than the previous one(Centre Piece Summer 2006). The gender pay gap measures the earning differences between women and men in paid employment in the labor market. It is one of many indicators of gender inequality in a country, when examining labor market participation in terms of gender (EC 2007).

The study “Global Employment Trends for Women” published by the International Labor Organization (ILO) in 2009 provides current information about the global gender pay gap. Assumptions about a decline or increase in the pay gap between women and men depend on the data available and differ in the subjects of study and country-specific wage and salary administration. Therefore a closer look should be taken at regional specificities. According to the ILO, progress in reducing the gender pay gap is very slow in Europe and Central Asia. In certain countries there has even been evidence of an increase in the difference.

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REVIEW OF LITERATURE Two main reasons for the pay gap can be identified (UNDP 2006): direct gender, Discrimination, in labor markets and occupational segregation. Direct discrimination occurs When people who have the same level of educational attainment and work experience are treated differently because of their gender: different pay levels for the same work or different job requirements for the same pay level. Efforts and achievements in the field of direct discrimination have been made in many countries by passing laws or establishing supportive institutions.

The various forms of discrimination relating to occupational gender segregation are more subtle as well as more delicate to address with specific actions(Center Piece 2008). According to the ILO, women represent 40. 4 percent of the worldwide workforce. However, that proportion is not reflected when investigating occupational groups within the various sectors: 46. 3 percent of employed women work in the services sector, 35. 4 percent in the agricultural sector and only 18. 3 percent in the industrial sector (compared to 26. percent of employed men) (ILO 2009). The specific sectors in which women employees are the vast majority – secretaries, teachers and nurses – also are poorly paid work areas. And even within these jobs they are paid less than their male colleagues (IWPR 2009). This fundamental under-evaluation of women’s work results basically from two facts. Firstly, women’s primary responsibility for unpaid care work such as children, education and basic family services seems to channel them into similar working areas in the labor market (UNIFEM 2005).

Some researchers refer to differences in occupations between women and men as the selection effect (e. g. Petersen and Snartland, 2004). The selection effect implies not only that women choose certain kinds of occupations, but that employers are favoring men over women by not adapting the work environment to suit both genders. Secondly, the specific way in which work skills are attained plays an important role in to their financial evaluation: The gender pay gap exists is evident from a brief review of labor force statistics.

The National Women’s Law Center (NWLC) declared that in the USA at the present rate of the gender pay gap the average woman had to work until April 2008 to make what the average man made by the end of 2007 ( NWLC, 2008). Evidence suggests a similar tendency in the European Union. For example, in the UK at the present rate of the gender pay gap the average woman who works full time would miss around $369,000 over her working life (BBC News, 2008). The existence of the gender pay gap almost all over the world has generated the need to better understand various factors contributing to it ( Blau and Kahn, 2006; Rubery et al. 2005). Auster (1989) has grouped the main explanations of the gender pay gap into two main categories: macro level, where women are seen as a homogeneous group, and micro level, which concentrates on psychological approaches viewing women as a heterogeneous diverse group. At the macro level, the focus is on economic theories, which provide explanations of the phenomenon based on such factors as differences in education, work experience, amount of starting salary as well as general explanations such as different types of discrimination.

Micro level explanations of the gender pay gap include such personal factors as individual preferences and forces, which change values and attitudes towards working conditions and compensation practices (Hakim, 2000). Gender Pay Gap Overtime Looking at the gender pay gap over time, the United States Congress Joint Economic Committee showed that as explained inequities decrease, the unexplained pay gap remains unchanged. Similarly, according to economists Francine Blau and Lawrence Kahn and their research into the gender pay gap in the United States, a steady convergence between the wages of women and men is not automatic.

They argue that after a considerable rise in women’s wages during the 1980s, the gain decreased in the 1990s. The 2000s are characterised by a mixed picture of increase and decline(www. wikipedia. com). Thus Blau and Kahn assume,”With the evidence suggesting that convergence has slowed in recent years, the possibility arises that the narrowing of the gender pay gap will not continue into the future. Moreover, there is evidence that although discrimination against women in the labor market has declined, some discrimination does still continue to exist. “(www. wikipedia. com).

A wide ranging meta-analysis by Doris Weichselbaumer and Rudolf Winter-Ebmer (2005) of more than 260 published adjusted pay gap studies for over 60 countries has found that, from the 1960s to the 1990s, raw wage differentials worldwide have fallen substantially from around 65 to 30% The bulk of this decline, however, was due to better labor market endowments of women (2005). The 260 published estimates show that the unexplained or discriminatory component of the gap has not declined over time. Using their own specifications, Weichselbaumer and Winter-Ebmer found that the yearly overall decline of the gender pay gap would amount to a slow 0. 7 log points, implying a slow level of convergence between the wages of men and women (American Progress 2012). According to economist Alan Manning of the London School of Economics, the process of closing the gender pay gap has slowed substantially and women could earn less than men for the next 150 years because of discrimination and ineffective government policies. A 2011 study by the British CMI revealed that if pay growth continues for female executives at current rates, the gap between the earnings of female and male executives would not be closed until 2109.

Factors Indentified Through Raw Gender Pay Gap Six factors that individually and collectively account for appreciable portions of the raw gender wage gap have been identified by researchers who have applied the first approach described above. The factors are: occupation, human capital development, work experience, career interruption, motherhood, and industry sector (American Progress 2012). Historically, men and women have worked in notably different occupations. As a result, the percentage of workers who are female varies greatly among occupations.

Researchers have used several terms to characterize this phenomenon, including occupational selection, occupational sorting, occupational segregation, and occupational crowding (2012). Women have functioned in occupations with relatively low wages (e. g. , teachers, nurses, secretaries, retail sales clerks) and men have disproportionately worked in occupations with comparatively high wages (e. g. , executives, managers, doctors, lawyers, engineers, scientists), the average and median earnings of women in general has been much lower than the average and median earnings of men in general.

Many researchers have independently derived results in statistical analyses of different data sets that consistently indicate that the main factor accounting for the gender wage gap is differences between the occupations in which men and women typically work (Wikipedia. com). The data sets used in the analysis include data for different months and years from the Current Population Survey (CPS). Several researchers have concluded, based on the available evidence, that the narrowing of the gender wage gap is largely due to narrowing of the gap in human capital development between men and women. Blau & Kahn, 2000). Specifically, based on a comparison of data from the CPS for March 1975 and March 2000, research has demonstrated that, over that 25-year period, women have become more educated, have increased their rate of participation in and their attachment to the labor force, and have moved into jobs traditionally held mainly by men. These adjustments have raised the average pay of women and reduced the gender wage gap (Blau and Kahn 2000). Blau has found that the narrowing of the gender wage gap throughout the 1990s has been ccompanied by a visible trend toward equality between the wage structure among women and the wage structure among men. They note that these trends have been preceded by increasing admission of women to post-secondary educational institutions during the 1970s and 1980s, and by a concurrent redistribution of men and women among major academic disciplines which has resulted in women increasingly studying mathematics and science, and men increasingly studying health science and education.

They further note that the technological revolution that has occurred during the late 1980s and early 1990s has introduced computers into many industries, including especially white-collar industries in which women are more likely than men to have jobs that involve using computers. (Wikipedia. com). They therefore conclude that women have likely benefited excessively from the technological improvements relative to men, and that all of the observed trends in human capital development have contributed to shrinking the gender wage gap.

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