what is the gender pay gap? copy
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Jordan Rohan Brown
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What is the Gender Pay Gap?
Critically evaluate mainstream and feminist explanations of its existence.
Introduction
The Gender Pay Gap (GPG) remains a pertinent issue within labour market
analysis. The occurrence of systematic and consistent differentials in wages
between men and women* has been characteristic of the capitalist market
economy system across the majority of the world. Although the gender pay gap is
said to be shrinking in recent years, the lack of standardised consistent
measuring techniques and alternating interpretations of how to define the GPG
(in the developed and developing world) has meant that there is no one clear
way to approach it. This inherent discrimination against women represents a
social, political and economic failure/inefficiency and an underutilisation of
human capital- more importantly it reinforces divisions in society and
patriarchal hierarchal structures.
Varying approaches to the question of ‘what constitutes productive economic
activity?’ has seen some economists such as Becker (1965) look towards the
household and its internal economic structure to explain the existence of the GPG
– where household activity is counted as part of the productive economy.
Additionally, the extension of feminist idea’s such as redefinition of archetypical
gender roles in employment and in the household - as well as changing family
structure and cultural views around the role of ‘breadwinner’ has created a more
diversified view of how the gender pay gap extends beyond just differentials in
average and real wages. This essay shall be primarily focused upon the
experience of Caucasian individuals primarily due to issues surrounding
intersectional racial discrimination data acquisition and availability.
Defining the Gender Pay Gap
The gender pay gap is typically described as the differential in pay between men
and women, with men on average earning more than women. The measurement
of this takes many different forms research. The raw pay gap looks at women’s
median hourly wages as a percentage of men’s median hourly wages. Whilst the
adjusted pay gap includes control for varying factors such as: part time vs. full
time work, education/experience, and type of profession. The latter approach
provides a more specific look into structural differentials at a micro level, whilst
the raw pay gap allows for a macro outlook for international comparisons. The
interpretation of statistical data is varied with The Office for National Statistics
(ONS) using the median hourly earnings – excluding overtime whilst OECD and
the Equalities and Human Rights Commission use the mean hourly earnings
(EWG, 2011). Each approach provides different results based on the method,
focus of the study and data available.
The Human Capital Theory
The Human Capital Theory is a relatively early theory in the explanation of the
GPG. It poses that rational agents are acting to maximise their utility, base their
investment in education, training and skill acquisition (via direct/indirect costs)
upon the potential return that it yield (Becker, 1993). Females are assumed to
receive less return than their invested time is worth, relative to a male with the
same level of qualifications/skills - due to employment discrimination against
females. This means that employers are less likely to employ women based on a
perceived lower productivity than a man, a reason for this is that females are
seen to be less likely to dedicate their time to their position due to household
duties. Additionally the potential for a woman to become pregnant means
increased absenteeism, which is seen as inefficient. Becker (2009:193) suggests
that women may well gain higher return from investment into tertiary education
through are said to be “more likely to marry educated and wealthy men” and
thus gain higher income through combined “family income’.
The theory suggests that female economic agents earnings are non-monotonic
dependent upon “the pattern of intermittent work behaviour” resulting from
pregnancy, marriage and other duties perceived to be completed by females
(Polachek, 2004). This places females at an inherent disadvantage when
considering educational investment – especially into the levels of tertiary
education, which provides access to higher paying jobs, helping towards
reducing the GPG.
Despite this increased
female participation in
the labour market has
seen large increases in
the reduction of the
GPG. Observing Figure
1 we can see the
increased female participation rate in the US from 44% in 1972 compared
against men at 79%. Forwarding to 2012, the differential shrinks to a 12%
difference between male and female participation with women at 58% and men
at a reduced figure of 70%. Albanesi and Sahin (2013:2) suggest that the
increased female participation rate increase is due to women becoming “less
likely to leave employment for nonparticipation—a sign of increased labour
force attachment”, this is perhaps due to social changes in the attitude towards
women working and entering tertiary education, as well as structural
movements away more primary and secondary industries into a tertiary service
based economy allowing for a wider range of more diverse and open job
opportunities (as seen in OECD nations such as Britain).
However, evidence has shown that globally that “while the average global
university enrolment ratio in 1970 was 160 men per 100 women, today it stands
at around 93 men per 100 women.” (Chamie, 2014). Also in “OECD countries
women’s college completion rate is on average 10 percentage points higher than
men’s.” (Chamie, 2014). With the pay gap still standing at 15%, this shows a low
Figure 1: Morin (2013)- The Labour Force Participation Gender Gap.
return on investment when a situation is presented where women’s wages
should theoretically exceed men’s’ based on the data (EWG, 2011). . Holding for
the assumption that productive activity (i.e. training, education) results directly
in higher wages, it is clear that one variable can show the disparity clearly –
discrimination based upon sex. This proves difficult to quantify and requires a
more in depth look into a more developed - less mainstream view into
occupational segregation between men and women. As it is usually considered to
be as a result of choice based on the selection of ones personal area of
training/study, without fully considering pre-existing barriers to entry that
reduce choice for the female economic agent.
Occupational Segregation and Discrimination
Looking towards an approach of dissecting the structures that disallow freedom
of choice in the labour market, for women (beyond appropriate qualifications),
includes the implementation of an adjusted pay gap to see where occupations
and their average wages impact upon the GPG.
The issue can be approached from two perspectives: vertical segregation and
horizontal segregation. Horizontal segregation refers to females being employed
in low-paid occupation relative to males, where the latter refers to “where males
occupy higher paid and skilled positions within the same occupation”, (EWG,
2011). Charles and Grusky (2004) suggest that post-industrialisation created a
situation where vertical segregation increased in non-manual jobs and
horizontal segregation is related to the expansion of female dominated service
and sales work, showing how occupational segregation is aligned to shifts in the
main sectors in the economy at any given time. Arrow(1971), created a model
attempting to look at ‘statistical discrimination’ from the perspective of
perceived risk aversion from employers and the idea that women have a higher
propensity to sporadic working schedules, opening for more questions around
the decisions of employers in explaining the gender and intersectional pay gap.
Bergman (1974:107) suggests that the existence of the segregation of roles
based upon gender (and race) creates positions where female and non-white
workers are forced into occupations away from their area of specialisation into
less discriminatory areas of work, the example used of females being forced to
work as nurses in the health sector, due a perceived lower Marginal Relative
Productivity (MRP) in more managerial positions, the result of this a swell in
particular (low-paying) sectors of female/males workers. This reinforces
cultural norms/ideals around particular roles and creates a self-perpetuating
cycle of expectations of an individual in a particular role (career) and reinforces
the GPG.
This represents socio-economic inefficiency in the labour market, where
qualified individuals are not gaining appropriate welfare from their investment
into their own human capital, in addition to the labour market from a demand
position, underestimating the MRP of women and therefore allowing for
increased excess supply i.e. unemployment, which is counter-productive to the
companies and economies growth. This reinforces societal roles around
gendered roles and patriarchal control, through the lack of female owned
enterprise and careers in positions of power, which represents a key issue in the
existence of the GPG (Chamie, 2014)(Plantenga and Remery, 2006).
Looking towards the neo-classical approach again, Becker (1971) describes
occupational segregation as resulting from a ‘preference for discrimination’,
where employers deem the addition of females (and other races, disabled
workers) to the workplace as being levied with sustained disutility. Acting as
rational agents they are then seen to not hire based on the increased cost,
although this theory raises several issues. Assuming a perfectly competitive
labour market, it is assumed that firms would seek to reduce costs and the firms
that have less ‘preference for discrimination’ would accrue higher profits
through utilisation of available labour, giving them a competitive advantage in
the market, but this has not been the case. It can be used as a useful extension of
human capital theory in explaining differentials as a tool however the lack of
explanation for the underlying discrimination and acknowledgement of wider
socio-economic patriarchal structures that may guide labour market decisions
are omitted, for a more comprehensive view of gender pay gap, we look may
observe the feminist perspective.
Anker (1997: 324-328) attempts to reduce the common characteristics that
women are stereotyped/perceived to have and attribute these to the expected
qualities in certain professions and how this impacts the creation of gendered
roles. Anker (1997, 324) presents 5 positive and 5 negative stereotypes of
women. The positive stereotypes being: a caring nature; skill and experience in
household-related work; greater manual dexterity; greater honesty; and
attractive physical appearance. These characteristics aligned with professions
mainly based in health and social care, administrative positions and sales roles
rather than positions of leadership/management. The negative stereotypes
outlined were: disinclination to supervise others; lesser physical strength; lesser
ability in science and mathematics; lesser willingness to travel; and lesser
willingness to face physical danger and to use physical force. This impacts upon a
woman’s acceptance into particular roles, which would subsequently be assigned
to men. This leads to the creation of gendered roles where women become
collectivised and creates a point where stereotypes reinforced. Importantly the
role of the stereotypes of “greater docility” and “greater interest in working at
home” represent a crucial factor underlying mentality underlying the
employment habits of firms. In a study conducted in 1992/1993 in Czech
Republic, Hungary and Slovakia around 33-35% preferred to employ men over
women in professional occupations, where as only 10% preferred to employ
women in these roles (Paukert, 1995).
Mackintosh (1984) discusses the role of the sexual division of labour where the
segregation of roles based on biological sex, extending to market based and
household economic structures and reinforces the argument for structural, social
and cultural factors being a significant factor in the existence and persistence of
the GPG. Looks towards trying to fill in the gap, attempt to through social
compensation for the potential time taken off during a potential pregnancy,
absenteeism from work for household ‘priorities’. This occurs though schemes of
Equal opportunities such as government subsidised childcare, treating it as a
public good, Barret et al. (2000) saw this as a key component to labour market
equality of opportunity.
Conclusion
The issue of the gender pay gap is one of many complexities and varying
interpretations across different schools of thought. The gender pay gap has fallen
significantly over the last 50 years in the developed world, through legislative
change towards equality such as The Equal Pay Act (1970) in the UK and The
Equality Act (2010). However it is still clear that this is an important issue with
the labour market in the UK and across the world, with the gap still standing at
15% (EWG, 2011).
Figure 2 : Breakdown of the gender wage gap (Blau and Khan 2007)
The feminist perspective attempts to understand underlying endemic reasons
for the gender pay gap existing. The mainstream neo-classical/neoliberal
perspectives tries to the look at the problem within the system (with the human
capital approach), whilst the feminist perspective looks at the problem with the
existing labour market structure in the context of overlying patriarchal
hierarchy. The idea of discrimination become hard to quantify as variable in the
labour market but ultimately represents a key disruption of welfare of over half
of the world’s population and in turn economically active population. Observing
Figure 2, Blau and Kahn (2007) show that the issue of the gender pay gap is
multifaceted beyond the immediate look at investment into human capital, which
can be see to represent -6.7% (though educational attainment) and perhaps
considers occupation which still only represents 27.4%.
The GPG does not just highlight the differentials treatment of females, but also
brings to attention the issue of institutional and endemic discrimination across
the labour market extending to varying groups in society, through unlocking the
roots of the gender pay gap. It is evident that the perceived difference that
women have against men is influenced by a number of different factors that
impacts upon social welfare in society and therefore economic growth and
development. Where the systematic discrimination of females, has led to a
restriction of options and choice in the ‘free’ labour market and the
reinforcement of the idea of female subordinance, with the positions of high
power being directly primarily at males, it is evident that this issue represents a
key issue in economics today and for the future development of the international
economic system. Without the removal of the GPG through cooperative action
and policy, we will continue to experience a failed market.
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