The actual gender wage disparity (which compares the wages of male and female workers with similar labor-force characteristics) is lower than the raw gender earnings gap.Wages ; Discrimination in employment

Natalia Kolesnikova

Yang Liu

English

Research Papers in Economics

Economic SYNOPSES
short essays and reports on the economic issues of the day
2011 ■ Number 25
T
he wage differential between male and female
workers has declined significantly over the past 30
years. For example, in 1979 the median weekly earn-
ings of full-time female workers were only 63.5 percent of
those of full-time male workers—a 36.5 percent difference.
This earnings gap dropped to 30 percent in 1989 and 23.7
percent in 1999. As of 2011:Q1, it reached a historical low
of 17.2 percent. Despite this trend, studies suggest that
actual gender wage disparity (which compares wages of
male and female workers with similar labor-force charac-
teristics) is smaller than the raw gender earnings gap dis-
cussed above. 
One recent study found that women’s progress in edu-
cational attainment during the 1970s and 1980s was the
main explanation for the decline in the gender wage gap
in the 1980s and early 1990s.1 In addition, women’s gains
in work experience accounted for one-third of the gap’s
decline in the 1990s.2 As women become more educated,
they have more employment opportunities in occupations
that require higher skills and pay higher wages. Such occu-
pational “upgrades” have helped to narrow the wage gap,
but there are still significantly fewer women in highly paid
occupations in law, medicine, and busi-
ness management. 
Another important reason for the
gender wage gap is the difference
between men and women in labor-force
attachment. Women are likely to leave
a career temporarily for childbirth and
raising children. Such leaves may be
associated with a decrease in their human
capital and temporary delays in training
and promotion, which consequently lead
to lower wages. In addition, women are
more likely to work part-time and less
likely to work overtime than men, which
negatively affects their wages. Evidence
suggests that female workers receive
more family-friendly benefits but usually
at the cost of lower wages.3 Similarly,
women of childbearing age may prefer lower-wage jobs
with employer-provided health insurance to higher-wage
jobs without health insurance. 
A recent report prepared for the U.S. Department of
Labor thoroughly analyzed the gender wage gap using
Current Popu  la  tion Survey data for 2007.4 The report esti-
mated the gap accounting for differences between male and
female workers in educational attainment, work experience,
occupation, career interruption, part-time status, and
overtime hours worked. The result was striking—these
factors explain approximately three-fourths of the 20.4
percent raw gender wage gap in 2007. The adjusted 2007
gender wage gap is roughly 5 percent. It is reasonable to
The Gender Wage Gap
Natalia A. Kolesnikova, Economist
Yang Liu, Senior Research Associate
The actual gender wage disparity
(which compares the wages of male
and female workers with similar 
labor-force characteristics) is lower
than the raw gender earnings gap.
0.6
5.6
10.6
15.6
20.6
25.6
30.6
35.6
40.6
0
100
200
300
400
500
600
700
800
900
1 9 7 91 9 8 41 9 8 91 9 9 41 9 9 92 0 0 42 0 0 9
Women (left axis)
Wage Gap (right axis)
SOURCE: Bureau of Labor Statistics.
Dollars Gap (percent)
Median Usual Weekly Earnings of Full-Time Workers
2011:Q1
17.2
Men (left axis)believe, therefore, that the actual 2011:Q1 gender earnings
disparity is likely to be closer to 4 to 5 percent rather than
the 17.2 percent shown in the chart (gray circle).5
Current research suggests that gender earnings dispar-
ity has declined but not disappeared. The adjusted (“true”)
gender wage gap, however, is substantially smaller than
the raw gender wage gap. Because of this, the raw gender
gap is the improper indicator for policymakers to use to
justify corrective actions. ■
1 Blau, Francine D. and Khan, Lawrence M. “Gender Differences in Pay.” Journal
of Economic Perspectives, Fall 2000, 14(4), pp. 75-99.
2 Blau, Francine D. and Khan, Lawrence M. “The U.S. Gender Pay Gap in the
1990s: Slowing Convergence.” Industrial and Labor Relations Review, October
2006, 60(1), pp. 45-66.
3 Lowen, Aaron and Sicilian, Paul. “‘Family-Friendly’ Fringe Benefits and the
Gender Wage Gap.” Journal of Labor Research, Spring 2009, 30(2), pp. 101-19.
4 CONSAD Research Corporation. “An Analysis of Reasons for the Disparity in
Wages between Men and Women.” January 2009; www.consad.com/content/
reports/Gender%20Wage%20Gap%20Final%20Report.pdf.
5 Put differently, the “real” gender wage gap in average weekly earnings is about
$35.
Economic SYNOPSES Federal Reserve Bank of St. Louis      2
research.stlouisfed.org
Posted on August 29, 2011
Views expressed do not necessarily reflect official positions of the Federal Reserve System.

The gender wage gap

http://research.stlouisfed.org/publications/es/11/ES1125.pdf

The gender wage gap

Abstract

Similar works

Full text

Available Versions

Research Papers in Economics