Discovering The Gender Pay Gap

The problem of gender differences in salary raises a lot of concerns as to its factors, processes and measurement among social scientists and policy makers all over the world.

Gender-based inequality is a phenomenon that affects the majority of the world’s cultures, religions, nations and income groups [5]. When scientists speak of the gender gap these days, they are usually referring to systematic differences in the outcomes that men and women achieve in the labor market. These differences are seen in the percentages of men and women in the labor force, the types of occupations they choose, and their relative incomes or hourly wages [4].

There have been significant increases in the labor supply of women in the last decades both in developed and developing countries. For instance, in the United States female participation in the paid labor force changed drastically in the course of the 20th century: in 1880 only 17% of all American women at working ages participated in the labor market, by 2000 this number had risen to more than 60% [3]. Nevertheless, the Global Gender Gap Index 2007 showing that no country in the world has yet reached equality between women and men – the highest ranking country has closed a little over 80% of its gender gap while the lowest ranking country has closed only a little over 45% of its gender gap.

Factors that describe the gender pay gap

Among various factors that describe the gender pay gap the most important ones are historical, cultural and economic.

Describing historical factors of the gender pay gap, we have to mention that after industrialization women became “secondary workers” in the labor market; they entered the labor market in smaller numbers and for shorter periods than did men. Moreover, occupations and industries were highly segregated by sex, partly because employers developed explicit policies to segregate the workplace and bar married women from employment [4]. Hence the wage structure changes over time but the historical evolution of well-defined systems of jobs and firms has created relatively stable segmentation by occupation.

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As for cultural factors, they are closely connected to the historical events. The development of modern family patterns during the past decades has been accompanied by substantial changes in social norms, values and gender relations all over the world. In most of modern societies women with higher returns to human capital and fewer children, increase their investments in education and their attachment to the market.

The economic factors are also very important. Because women are very likely to interrupt their career for children bearing period, and employers avoiding workers with high quit rates (for economic reasons), therefore, women comparing to men are less likely to receive stable well-paid jobs.

Micro-level processes that cause the gender pay gap

As wage differences among workers can be explained by processes that match individuals to jobs, we should research how individual women and men are sorted into different positions and thereby obtain different levels of reward. Margaret Mooney Marini and Pi-Ling Fan have conducted a research “The gender gap in earnings at career entry” in which the micro-level mechanisms of the gender wage gap were investigated. Those are gender differences in job-related skills and credentials, adult family roles, work and family aspirations, the availability and use of information and influence via social networks; gender discrimination in hiring and job placement by employers.

The results of the research showed that explanatory mechanisms focusing on the characteristics of workers explained only 30 % of the gender difference in wages. But the gender differences in aspirations and in job-related skills and credentials were the most important in accounting for the gender pay gap. The allocation of women and men to different jobs by employers, and informal processes of social contact and social interaction via networks play an important role in wage determination at career entry. Moreover, gender differences in family structure had no significant direct effect when the effect of worker qualifications and aspirations were considered [6].

How to measure the gender gap

One of the instruments to measure the gender gap is the Global Gender Gap Index introduced by the World Economic Forum. This index is a framework for capturing the magnitude of gender disparities. It aims to be a tool for bench­marking and tracking global gender-based inequalities on economic, political, education- and health-based criteria [5]. The structure of this index is in the Appendix.

In this paper we are interested only in the economic participation and opportunity analyzed by the Index. This area is captured through three concepts: the participa­tion gap, the remuneration gap and the advancement gap. The participation gap is captured through the difference in labor force participation rates. The remuneration gap is captured through a hard data indicator (ratio of estimated female-to-male earned income) and a qualitative variable calculated through the World Economic Forum’s Execu­tive Opinion Survey (wage equality wages for similar work). Finally, the gap between the advancement of women and men is captured through two hard data statistics (the ratio of women to men among legislators, senior officials and managers, and the ratio of women to men among technical and professional workers).

Conclusion

The gender gap is a difference in outcomes that men and women achieve in the labor market. Because labor market rewards derive from labor market positions, it is important to understand why women receive less rewarding positions and what the mechanism of the gender pay gap is.

There are historical, cultural and economic factors that influence gender pay gap. Historically occupations are segregated by sex, but women return to human capital more often than in the past and decrease their quit rates during childbearing period. Among micro-level processes that cause gender pay gap, the most important are gender differences in aspirations, job-related skills and definite social networks inclusion.

In order to measure gender gap scientists use the Global Gender Gap Index which examines the gap between men and women in four fundamental categories: economic participation and opportunity, educational attainment, political empowerment, health and survival.

Appendix. Structure of the Global Gender Gap Index