Second, the findings show that men and women do not receive the same returns to their productive skills. The idea that wage structures are in fact gender-specific is supported by earlier studies which provide evidence for gender differences in returns to education, work experience, and occupations. The data that's emerged shows the gender pay gap across the OECD narrowed from 19% in 1996 to 12% in 2021, based on median earnings for women and men. Our findings show that market rewards to education and work experience differ significantly for men and women, and that these differences account for a much larger proportion of the wage gap than differences in the levels of education and work experience between men and women. Male-female wage differentials in Urban Labor markets. As a consequence, it is harder to interpret the results from the table, especially since all the experience variables are also interacted with gender. Demography, 55(2), 669690. This publication is part of a project that has received funding from the European Research Council (ERC) under the European Unions Horizon 2020 research and innovation programme (grant agreement No 724351). Male-female wage differences: The importance of compensating differentials. As shown in Table 2, the estimated gap between mens and womens hourly wages was $9.2 in 1980, declining to $8.06 by 2010. Note that although we focus on education and experience, the model also controls for Region and Race, replicating Blau and Kahn's human capital model. How big is the US gender pay gap? | World Economic Forum However, interpreting the returns to skill while controlling for segments that has almost no variation in education is questionable. Clark cited education and race as other factors, too. Overall, women engineers in most states have average salaries that are between 80% and 89% of those of men engineers. In search for explanations for differential returns to human capital, we need to distinguish between two types of explanations: those that rely on differences in the behaviors of men and women in the labor market, and those that focus on the structure of the labor market. 4 clearly shows. The unchallenged convention of always using the log-wage in statistical models, together with the predominant conceptualization by economists of human capital as an individuals investment, has led to the misrepresentation of the gender gap in returns to education and experienceeven in studies that were focused on precisely this. However, differences in human capital and other productivity-related characteristics do not explain the entire gap. Earning Gap by State: According to data from the U.S. Census Bureau, women engineers' average salary is between 77% and 111% of men's average salary. In practical terms, this means that unlike most decomposition analyses, we aim to disaggregate the unexplained portion of the wage gap, in order to reveal how gender differences in returns to the two prime components of human capitaleducation and work experienceaffect the gender wage gap. In contrast, studies that did examine the contribution of structural aspects to the gender wage gap (e.g., Albrecht et al., 2003; Arulampalam et al., 2007; Chzhen & Mumford, 2011; Filer, 1985) did not look further in order to distinguish between differences in returns to specific characteristics like education and experience, as we do. (2014). The marginal effects reported in Table 1 suggest that the hourly wage premium for a bachelors degree in 2010 was $12.3 for men, compared to only $6 for women. PolitiFact has been fact-checking claims about womens pay for years. The Time To Close The Gender Pay Gap Is Now: How You Can Join - Forbes Exploring the gender pay gap across the wage distribution. The Journal of Human Resources, 23(3), 279295. Connecting the Dots: "Women's Work" and the Wage Gap b Absolute returns to full-time work experience. The gender pay gap describes the difference between the "average earnings" of men and women. We do so by decomposing the real hourly wage gap between men and women in 1980 and 2010. A second look at the process of occupational feminization and pay reduction in occupations. Men report making an average of $7,300 more than women as RNs. Budig, M. J., & England, P. (2001). For example, if the male coefficients are used as the standard (as in the equation above), the explained portion of the gap consists of the part of the gap that is due to differences in human capital between men and women if women had mens coefficients which they most likely do not. Although both show that returns to education are gender specific, the latter shows a clear advantage for men, in all education categories and for both time-periods, which cannot be seen in the former, where education premiums are presented as rates of return. In theory, the wage structureas the real market value for productivity-related skillsis gender-neutral, determined by economic forces in a given market regardless of the workers identity. St. Petersburg, FL The portion related to returns to education as well as the portion related to returns to experience are much larger in these occupations. Top. Data is a real-time snapshot *Data is delayed at least 15 minutes. Studies that did document gender differences in returns to human capital usually did not examine the contribution these differences made to the gender wage gap. Its important to know a speakers choice of words can significantly affect whether their point about the gender pay gap is right or wrong. The paper discusses the mechanisms underlying these findings. 2 and 3. a Relative returns to education. While the explained component of the gap has been meticulously scrutinized, the unexplained portion is usually treated as a monolithic element, and as such is rarely given close and detailed examination despite its increasing relative size over time. Do highly paid, highly skilled women experience the largest motherhood penalty? So while the data does show a disparity, it is not an apples-to-apples comparison of pay for equal work. The gender wage gap persists, and women make 83 cents for every dollar a man makes. In a threefold decomposition of the log-wage gap (not presented here), distinguishing between the effect of different characteristics and different rates of return, we found that the portion explained by experience was 13.3% and 9.2% in 1980 and 2010, respectively. Replication data for: The gender wage gap: Extent trends, and explanations. The .gov means its official. Data refer to full-time employees on the one hand and to self-employed on the other. ", The global cost of corruption is as much as 5% of the world's GDP., If you look at some of these places that (reduced police funding), theyve already seen crime go up.". Gender pay gap 2023: How to check your employer Our findings thus show that it is within the primary labor marketexactly where human capital is rewarded the most and where high-skilled women can expect to realize their earnings potentialthat women find themselves subject to a different set of rules compared to men. More specifically, in 1980 gender differences in educational attainments explained 3.7% of the wage gap. Gottlieb, J. D., Hmous, D., Hicks, J., & Olsen, M. (2019). The earnings ratio varied by race and ethnicity. Journal of Political Economy, 70(5), 949. The rate of return fits the neoclassical economic perspective, which conceives human capital in terms of an investment made by individuals, and the benefits that accompany human capital as returns to investment. Women earn 82 cents for every dollar a man earns. The third and fourth columns of Table 1 present the results of the real wage models for 1980 and 2010 respectively, and Fig. Tuesday is Equal Pay Day: March 14th represents how far into the year women have had to work to catch up to what their male colleagues earned the previous year. American Sociological Review, 79(3), 457484. According to government figures the median pay gap between men and women has remained at 9.4% since 2017. Because the baselines are different for the two gender distributions, a 10% wage increase in the womens distribution is worth less (in absolute terms) than a 10% increase in the mens distribution. (2010). https://doi.org/10.1086/683779, Neumark, D. (1988). The gender wage gap: Extent, trends, and explanations. Here, we looked at workers ages 35-44. (2011). Whilst Blau and Kahn acknowledge that the unexplained portion is the main source of gender inequality, not much of the discussion is dedicated to these differences in returns, and the contribution of specific elements of these differences, namely education and experience, are not reported. As a threefold decomposition was used, the explained portion of the gap represents only the differences in characteristics between men and women, and is isolated from the gender differences in returns. Wages in these occupations are higher, but so is wage inequality (Gottlieb et al., 2019), which reflects on gender inequality. The gender wage gap is also an outcome of the market price for human capital, a price that is affected by supply and demand. https://doi.org/10.2307/2554808, Blau, F. D., & Kahn, L. M. (1997). The fact that the PSID data include information on the work history of each respondent is what puts them in a unique position to provide the most accurate measures of actual work experience, as opposed to the frequently used estimated experience based on age and years of schooling (Blau & Kahn, 2013); 4) Racein four categories: white, black, Hispanic, and other; 5) Region in four categories; and 6) residence in metropolitan vs. rural areas.Footnote 3. Ponthieux, S., & Meurs, D. (2015). Police defunding is to blame for skyrocketing murder rates in Philadelphia, Minneapolis, Portland, New York City, Chicago, Los Angeles and Washington, D.C. Biden agrees to Pelosi's request to resign., Gas prices highest in a decade. As discussed above, we employ two modifications to the standard decomposition method used by Blau and Kahn (2017a): estimating the absolute, rather than relative, effects of human capital; and using a threefold, rather than twofold, decomposition. Integrating economic dualism and labor market segmentation: The effects of race, gender, and structural location on earnings, 19742000. Sarah Jane Glynn is a senior advisor with the Womens Bureau. The wage gap between women and men has narrowed a lot in the last 40 years, Clark said. The overall gender gap a measurement of . As a result, this could lead to "economic loss at the individual and macroeconomic levels," as economies see "limited and divergent" progress in elevating women over the past 10 years, Moody's said. Though progress has been made, there is still a lot of work that needs to be done to close the pay gap between men and women in the United States. Women earn just 82 cents for every dollar a man makes. We need your help. (Heres detailed government data on earnings from 1960 through 2017.). Although the wage structure is assumed to be gender-neutral, in a series of seminal works Blau and Kahn brought attention to the importance of the wage structure in shaping the gender wage gap. The proposal passed in the House of Representatives and has stalled in the Senate. As has long been the case, the wage gap is smaller for workers ages 25 to 34 than for all workers 16 and older. The data that's emerged shows the gender pay gap across the OECD narrowed from 19% in 1996 to 12% in 2021, based on median earnings for women and men. Know this about the data: it is not a direct comparison of men and women doing the same work. Its an average that widens or closes by factors such as race, type of job, and age. These returns have been assumed to be gender-neutral, and their relation to gender mediated by differences in human capital between the gender groups. The Blinder-Oaxaca decomposition for linear regression models. The gender pay gap is even more significant and closing more slowly for BIPOC women who collectively comprise less than 17% of the RN workforce. PubMedGoogle Scholar. The effect of the wage structure, according to this logic, is not due to gender differences in rewards to wage-related characteristics (which are assumed to be the same), but due to compositional differences between men and women with regard to wage-related characteristics. Kunze, A. Schooling, experience and earnings. The World Bank in a recent report added that discrimination has kept the gender wage gap in place. Correspondence to "Research shows that more than half of the gap is due to job and industry segregation essentially, women tend to work in jobs done primarily by other women, and men tend to work in jobs done primarily by other men and the mens jobs are paid more," said Jennifer Clark, a spokeswoman for the Institute for Womens Policy Research. Key Takeaways In 2022, women earned 17% less than men on average. Therefore, the gap between mens and women's coefficients represents gender inequality in the value of labor market skills. The contrast between Fig. A grand gender convergence: Its last chapter. These figures are included in the World Economic Forum's wide-reaching Global Gender Gap Report 2017 which looks at the differences between men and women in four key areas; health, economics, politics and education. Marcos Del Mazo | Lightrocket | Getty Images, On average, women make a higher upfront investment in education but tend to land in lower-level and lower-paid positions, employed below their skill level, Google distances itself from planned drag performance after employee petition, Accenture Chief Diversity Officer Beck Bailey Celebrates Pride Month, Grindr went public 7 months ago. The rising returns to both education and experience over recent decades (Haelermans & Borghans, 2012; Juhn et al., 1993; Murphy & Topel, 2016) makes the distinction between the two even more crucial for understanding trends in the gender wage gap. We want to hear from you. Donald Trump called up Putin today and made a new deal that will save America., Gold fringe on an American flag means the Constitution is suspended., Biden administration quietly DROPS all charges against Sam Bankman-Fried.. A new interactive data tool from the Womens Bureau compares the wage gap by sex, race, ethnicity and occupation group. https://doi.org/10.2307/145830. Research suggests women are overrepresented in jobs that tend to pay less, for a variety of reasons. In 2022, women ages 25 to 34 earned an average of 92 cents for every dollar earned by a man in the same age group - an 8-cent gap. Estimated earned incomes of both men and women have been increasing since 2006, but men's income increased at a higher rate than that of women, worsening the gap (score 64.2%) by 4 percentage points since. Hegewisch, A., & Hartmann, H. (2014). In 2022, women ages 25 to 34 earned about 92% as much as men of the same ages, but women ages 35 to 44 and 45 to 54 earned 83% as much. Between 1980 and 2010 women increased their share in these occupations from 26% to 43% (authors calculations from the Current Population Survey data (US-CPS)). Of a particular importance is the inflow of women into high paying managerial and professional occupations (Mandel, 2012; Roos & Stevens, 2018). They found that in 2000, returns to college education was higher for women than for men; white women could expect a 118% increase in their earnings (relative to high-school graduate women), as compared to only 69% increase for men. This is what we term as a gender-specific wage structure, and it begs the obvious question: why is it so? Specifically, we distinguish between manual and semiprofessional occupations vs. professional and managerial occupations, and between the manufacturing industry versus the service industry. Lastly, and most importantly for the current discussion, the figures show that in both years, men benefited from their experience substantially more than women, and the findings are similar whether it is relative or absolute returns being considered. More specifically, the part of the wage gap explained by education differences was 2.7% in 1980 and -7.9% in 2010 (suggesting that equalization of education in that year would increase the wage gap, as women attained more education than men despite earning less); the part explained by differences in work experience was 23.9% and 15.9% in 1980 and 2010 respectively. Open Access This article is licensed under a Creative Commons Attribution 4.0 International License, which permits use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons licence, and indicate if changes were made. Following this assumption, if gender differences in the rewards for skills do exist it is due to market failure; therefore, these differences are conceived as the unexplained portion of the gender wage gap. Figure2A illustrates the effect of education (based on both degree and years of schooling) on wages, by gender and year. A Division of NBCUniversal. The Racial Wage Gap Is Shrinking - The New York Times 3b presents the absolute hourly wage premium, based on the log-wage and real wage models respectively. The explained portion refers to the part of the gap that is the consequence of differences between men and women in their productivity-related characteristics, such as work experience and education. Highest inflation in 3 decades. When calculating the net effect of postgraduate education (controlling for years of schooling), we find that in 1980, a postgraduate degree led to a 23% wage premium on average for women, as compared to 6% for men.
