Why do women still earn less than men?

In the nearly fifty years since the passing of the Equal Pay Act the gender pay gap in the UK has proved to be stubbornly resilient. What has changed is the way economists try to explain its existence and persistence. Fifty years ago economists used to explain differences in wages predominantly in terms of differences in experience, education and training, what collectively they termed ‘human capital’. Whilst they recognised that luck, nepotism and discrimination may be important, differences in human capital were thought to be the dominant determinant of wage differentials. It was, however, recognised that female workers were typically crowded into a narrower range of occupations and industries than males. Moreover, whilst glass-ceilings constrained many female employees’ ability to move up the job-ladder, it was also evident that employers tended to place a low premium on caring skills, which traditionally have been more associated with female workers.

More recently economists have established the importance of non-cognitive productivity-related characteristics, such as motivation, resilience and initiative, in explaining differences in wages. In terms of explaining the gender pay gap this opens up three intriguing possibilities. It may be that females are, on average, less endowed with those productivity-augmenting characteristics. This may be the result of nature or nurture and here the findings that single-sex schooling may be related to lower gender pay gaps is of interest. An alternative hypothesis is that females may have, on average, different preferences, placing a lower relative value on the monetary benefits from working. A third possibility is that employers do not reward males and females similarly for a given non-cognitive characteristic. Behaviour which is seen by employers as positive when undertaken by males, such a providing leadership in group discussion, may be viewed as indicative of a poor team-player when evident in a female employee.

If we are serious as a society about eliminating the 18 per cent gender pay gap then it may be time to pay less attention to altering the behaviour of female workers and spend more time creating more male homemakers.

Nick Adnett, Professor in Staffordshire Business School

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