Gender Wage Gap:Systemic Explanations & Social Elasticity in the U.S.

Elizabeth O’Neill, ECON 539, 6.4.07

What evidence documents the wage gap between male and female full-time wage earners?

How is the wage differential measured through various economic models?

What are the systemic reasons for the inequitable pay distribution between women and men?

Key Sources:• Blau, F., Ferber, M. & Winkler, A. (1998) The Economics of Women, Men

& Work, 5th edition. Uppersaddle River: Prentice Hall. • Karamessini, M & Ioakimoglou, E. (2007).Wage Determination & the

Gender Pay Gap: A Feminist Political Economy Analysis & Decomposition. Feminist Economics. 13(1): 31-66.

Central Questions:

Literature Review Structure Definition & evidence of gender wage gap Social elasticity models of measurement Summarizing reasons leading to the gender wage gap:

Macroeconomic factors Industry specific trends Employer-based discrimination Employee-based causative factors

Brief analysis of literature reviewed

Wage Gap Defined Examines wage differentials between men & women

who are performing similar paid work, with two different assumptions: equal conditions and systemic differences.

Undisputed consensus regarding the gender wage gap but viewed as either persistent discrimination or cohort-based.

Female-to-male earnings ratio ranged from 57% to 81% since WWII.

Social Elasticity

Construction of Wage Differentials Neoclassical Economic Theory

Human Capital Theory

Occupational Crowding Theory Determined by % female within occupations

Feminist Marxian Analysis

Macroeconomic Determinants “Feminization of Labor”

Concentration of low-wage, low-skilled jobs based on expectations of women’s unpaid labor

Reinforces gender differences U.S. transition from goods to service based economy

*Occupational Segregation Strong demonstration that female-dominated occupations

depress wages for both men and women

Industry-Based Factors Changes in public sector employment

More women employed in public sector equates to a lessening of the wage gap

Contributing factors are varied occupational distribution, attention to nondiscriminatory recruitment and retention efforts, and higher unionization rate.

Level of unionization Higher unionization rates improves low-skilled women’s

wages De-unionization depresses men’s wages but not women’s,

resulting in a lessening of the gap by proxy

Employer-Based Factors Starting wage divide

Slight difference at start of career, but exponentially grows Unequal promotion and compensation rates Organization size:

Wage gap in small organizations: 29% Medium: 15% Large: 17% Larger: 24% Differences explained by level of educational returns and

access to supervisory positions

Employee-Based Factors Workforce participation gaps: Women’s wages have

increased with delayed marriages and lower fertility rates

Lack of educational investment early education (HS pro technical, math) later education (college attainment)

Negotiation skill disparity contributing to inequitable starting wages

Summary of Influential FactorsPercentage of wage gap (dependent) =

βo + γ1(percent female within occupation) +

γ2(educational attainment level) + γ3(continuity of employment) + γ4(on-the-job training access) +

γ5(union participation) + γ6(public sector) +

γ7(starting wage) + γ8(access to job mobility) + γ9(access to supervisory positions) + γ10(organizational size) +

γ11(labor force continuity) + γ12(educational investments)

Analysis of Reviewed Literature Cohort perspective would take six decades to

reconcile the gender wage difference, longer if economic trends influence the current projections.

Persistent discrimination is a complex relationship; researchers largely believe remnants remain.

Measuring the wage differential will need to incorporate demonstrated attenuating variables.

Policy Implications

Questions?

The most equitable competitive equilibrium will require continued government intervention for both supply and demand sides of labor.

Current national policies address employer-based discrimination; further attention needed for systemic, industry-related, and individual-based causations.