Why Do Women Earn Less Than Men?

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THE EARNINGS PUZZLE: WHY DO WOMEN EARN LESS THAN MEN?

ABSTRACT

Even though it is against the law to pay women a lower wage based on gender, a significant earnings gap exists. Women earn less than men in almost every line of work regardless of age, race, ethnic background or level of education. This study discusses the disparity of income between men and women, and the primary factors that contribute to the disparity. It then looks at some of the legislation that has been passed or is under consideration to address the issue. Finally, it concludes that there are many reasons for the disparity other than gender discrimination. Men and women are motivated by different things and therefore make different choices. Gender discrimination may contribute to the gender earnings gap. However, discrimination is not the only or even the most significant factor.

INTRODUCTION AND OVERVIEW OF THE GENDER EARNINGS GAP

This paper will analyze the gender earnings gap. First, it will present the history of the issue, a current overview of the issue, and associated statistics for both. Second, it will summarize existing research and literature on the subject. It will then examine the factors that contribute to the discrepancy in earnings. Next it will outline some of the measures taken or being considered by the government to remedy this problem. Then, the paper will look at current trends in education and the future implications of those trends. Finally, the paper will conclude that gender discrimination is not the only or most significant factor in the gender earnings puzzle, but is still a problem that deserves attention and needs to be addressed. The gender wage gap is a significant issue that has been analyzed by economists since at least 1890, and has been a key issue of the women’s movement since the early 1960s. Throughout the history of this issue, substantial changes have occurred in the composition of the workforce, the occupations chosen by men and women, and the wages earned by women relative to their male counterparts. According to Goldin (1990) the gap between men and women labor force participation in the United States has been steadily declining since at least 1890. At that time, only 15 percent of all women (all races and marital statuses) between the ages of 25 to 44 in the United States worked outside of the home. This figure continuously rose over the years and reached 76 percent by 2000. The statistic was 93 percent for men in 2000. Female participation in the workforce was substantially higher but male participation was slightly down. Therefore, the gap in labor force participation between men and women has greatly narrowed. Women accounted for over 47 percent of the workforce by 2000. Even though women’s participation in the workforce has increased steadily over time, different demographic groups among women increased their participation in the workplace at different times. For example, women 45 years-old and older substantially increased their participation in the workforce in the 1940s, but younger women did not (Goldin 1990). It was not until the 1970s and 1980s that participation rates significantly increased for younger married women. Women with infants, who had resisted change previously, started to go to work in the 1980s. Changes in the composition of the workforce have had an impact on the gender wage gap, which is the gender gap that receives the most attention. The gender earnings gap narrowed in numerous ways over the course of the twentieth century, most notably during the 1980s. In the 1980s, women’s earnings rose from 60 percent of their male counterparts to over 75 percent (Blau and Kahn 2000). However, the narrowing of the gender earnings gap seems to have come to a standstill towards the end of 1990s and has failed to progress since then. Even though comprehensive data is not available before 1950, Blau and Kahn (2000) found that after properly combining evidence for...
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