The Gender Pay Gap

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The Gender Pay Gap

Why do women, on average, earn less than men? In the United States in 2008, the typical woman earned about 80 percent as much as the typical man. A recent study explored several factors that contribute to the gender pay gap. The study observed a gap of about 20 percent among workers aged 26 to 34, and identified four factors that contribute to the gender gap:

Difference in worker skills and productivity. On average, women have less education and work experience, so they are less productive and thus receive lower wages. An important factor in the lower level of work experience among women is that many women interrupt their careers to raise children. The study concluded that lower productivity is the most important factor in the gender gap. •Differences in occupational preferences. Wages vary across occupations: Clerical and service occupations receive lower wages than craft and professional occupations. Compared to men, women express stronger preferences for low wage occupations, such as clerical and service occupations, and weaker preferences for some high-wage occupations, such as craft and operator occupations. In contrast, men have slightly stronger preferences for high-wage professional and technical occupations. On balance, the general orientation of women toward low-wage occupations contributes to the gender gap. •Occupational discrimination. Given the variation in wages across occupations, if employers have a bias against hiring women for high-paying occupations, women will receive lower wages. The study shows that on average, women are less successful than men in attaining their desired occupations, and this occupational discrimination by employers explains between 7 and 25 percent of the gender gap. •Wage discrimination. If employers pay women less than their equally productive male counterparts, women’s wages will be lower. The results of the study on this issue are mixed, with some evidence that wage discrimination is a...
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