Jordan Rohan Brown

570236

word count :2494

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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