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Global Wage Report 2016/17 - Wage Inequality in the Workplace - What Lies Behind the Gender Wage Gap

What Lies Behind Gender Wage Gaps: A Review of the Literature

Human capital explanations of pay gaps, developed by Becker (1964) and Mincer (1974), focus on education and accumulated work experience. These suggest that women have different educational backgrounds or attainment levels from men, and are more likely to have career interruption(s) that lead to lower levels of accumulated work experience. Empirical studies provide evidence that differences in human capital represent a significant part of the wage differential between men and women.

However, as gaps in education between men and women have narrowed, particularly in more developed economies, so has the explanatory power of education in explaining the remaining gap (World Bank, 2012). Indeed, in 43 out of 53 countries,* after controlling for individual characteristics and place of residence, differences in education between men and women are very small or have even reversed, such that women have higher levels of education than men. In these cases, education not only fails to explain the observed gap but, when taken into account, actually increases the unexplained gap. The notion that educational differences fail to explain completely the differences in pay between men and women has redirected the focus. Instead of focusing on the differences in the number of years of schooling (or degrees attained), a newer stream of research explains wage differentials by the fact that men and women tend to specialize in different fields of education (Machin and Puhani, 2003).


The transition in the literature from the amount of education received to the field of education one studies also provides evidence of changing goalposts: now that women have achieved parity in education, the pay equity goal posts shift further away and focus on the type of education (O’Reilly et al., 2015; Grimshaw and Rubery, 2015). In other words, the goal of pay equity becomes increasingly elusive. Differences in access to and choice of educational specialization are also linked to occupational segregation and the undervaluation of women’s work. Occupational segregation relates to the over-representation of women in particular occupations. In some cases, occupational segregation occurs following the educational choices of women. For example, since the majority of individuals who study to become nurses are women, this profession is over-represented among women. Similar findings can be observed in other sectors, especially those occupations related to care work. In general, care work is undervalued because it may be perceived as a natural female attribute rather than a skill to be acquired and cultivated (Peetz, 2015). Subsequently, the over-representation of women in sectors where their work is undervalued results in a gender pay gap. Across a sample of 33 low- and middle-income countries, gender differences in occupation and sector of employment accounted for 10–50 per cent of the observed wage gap (World Bank, 2012). Research also showed that in the United States, declines in occupational segregation were also linked to decreases in the gender pay gap (UN, 2016). At the macroeconomic level, many studies have shown that economic growth is not strongly correlated with the narrowing of gender pay gaps (Nopo, Daza and Ramos, 2011; Hertz et al., 2008; Blau and Kahn, 2003; Dar and Tzannatos, 1999). The relatively tenuous linkage between economic development and the gender pay gap is not surprising given the huge variation in institutional environment, cultural norms and policies in place across countries. Moreover, all of these factors have changed over time.

Generally, countries with strong labour market institutions and policies, such as collective bargaining and minimum wages, tend to provide environments conducive to promoting gender equality (Schäfer and Gottschall, 2015; Ugarte, Grimshaw and Rubery, 2015). In countries where collective bargaining is strong, inequality tends to be lower and this also translates into lower pay gaps. Across OECD countries, research shows that the gender pay gap is smallest (8 per cent) in the group of countries where the collective bargaining rate is at least 80 per cent, and widest in countries with weak collective bargaining and no or very low minimum wages (Rubery and Grimshaw, 2011). Generally, however, the presence of unions tends to be weaker in sectors where women are overrepresented (Peetz, 2015; ILO, 2008b), and women are over-represented among the low-paid in both developed and developing countries (Lee and Sobeck, 2012; ILO, 2010a). For this reason, minimum wages are also an effective policy to help reduce the gender wage gap between men and women at the bottom of the wage distribution.

* In the remaining ten countries, all of which are low- and middle-income countries, educational differences between men and women accounted for 10–50 per cent of the observed wage gap in five of them, and for 0–10 per cent in the other five.

ILO – International Labour Organization

Direct Link to Full 150-Page 2016 ILO Report:


Global wage growth falls to its lowest level in four years. http://www.ilo.org/global/about-the-ilo/newsroom/news/WCMS_537790/lang--en/index.htm

Извор: WUNRN – 16.12.2016





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