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Francine D. Blau
Francine D. Blau
Lawrence M. Kahn
Lawrence M. Kahn
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Editor’s note: Francine D. Blau and Lawrence M. Kahn are economics professors at Cornell University. The research in this post is based on “The Gender Wage Gap: Extent, Trends and Explanations,” an article Blau and Kahn co-wrote in the September, 2017 of the Journal of Economic Literature. This analysis is being published here in collaboration with EconoFact, a nonpartisan economic publication.
In 2016 women who worked year-round and full-time earned, on average, around 81 cents for every dollar earned by men. Though still substantial, the difference in women’s average earnings relative to men’s has narrowed considerably since the 1970s. But the largest improvement in women’s wages relative to men’s happened during the 1980s and progress has been slower and more uneven since then. This is especially true for women at the top of the income distribution. Gender wage gaps at the higher levels of the wage scale are larger and declined more slowly over time than at lower and mid-income levels. By 2010, the wage gap between men and women was larger for the highly skilled than for other workers, suggesting that developments in the labor market for executives and highly skilled workers especially favored men.
In terms of work experience, the story is also one of considerable narrowing of the differences between the genders. In 1981, men had nearly 7 more years of full-time job experience on average than women. By 2011, the gap had fallen markedly to only 1.4 years, with the fastest catch-up occurring during the 1980s. As a result of these advancements, a much smaller portion of the current wage gap between men and women can be attributed to differences between them in schooling or work experience. In 1980 the fact that women lagged behind men in education and experience accounted for 27 percent of gender wage differences. By 2010, differences in education and experience only accounted for about 8 percent of the – much smaller – wage gap. Although the type of education women receive has changed toward more mathematics and career-oriented programs, they continue to lag in higher-paying STEM fields (science, technology, engineering and mathematics).
Moreover, while women have ascended managerial ranks, they remain underrepresented at the very top tier of the management hierarchy: although women are nearly half of managers in Fortune 500 companies, they comprised only 14.3 percent of executive officers in 2012, and made up 3.8 percent of CEOs and held just 16.6 percent of board seats in 2011 (see here for more information on women in S&P 500 companies). Changes in the relative returns to different occupations also played a role: Increasing returns to occupations in which men are more heavily represented contributed to the gender wage gap. Consequently, by 2010 — especially given the diminishing importance of education and experience — gender differences in occupation and industry together accounted for over one half of the gender wage gap.
There is some evidence that career-family tradeoffs are a particularly important factor in wage differences for women in high-skilled jobs. Workforce interruptions, fewer hours worked or greater workplace flexibility have a considerable cost in terms of earnings in some higher-paying occupations. Studies of lawyers and business school graduates have found that men and women earn equivalent wages after graduation but diverge widely as they progress in their careers: 15 years after graduation male lawyers earned 52 percent more than their female counterparts and male MBA graduates earned 82 percent more 10-16 years out of school. To the degree that women continue to assume traditional gender roles within the family, they are more likely to take time off to have or raise children and may place a higher value on workplace flexibility than men. As a result, they may be willing to accept lower wages in return for greater flexibility.
Beyond discrimination, it may be that there are differences between the genders that are more difficult to measure than education or work experience that result in different wages. For instance, gender differences in psychological factors or non-cognitive skills may account for a small portion of the unexplained gender wage gap. Women have been found to be less willing than men to negotiate and compete. On the other hand, there is some evidence that women have better interpersonal or “people” skills and are more agreeable than men. Firms and industries may place higher or lower values on such attributes and compensate accordingly. The extent to which these factors are due to societal expectations or are ingrained is a subject of debate.
What this means
There has been substantial convergence in the labor market earnings of men and women since the 1980s. Women have made tremendous gains in education and work experience, but reaching pay parity remains elusive. Finding ways to further reduce the gap is likely to hinge on achieving a better understanding of why men and women tend to sort into different occupations and industries. Similarly, recent trends point to the importance of looking into why women’s progress in higher-skilled jobs has been relatively slower. Addressing work-family issues is also important in furthering gender equity in the labor market.
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