Gender pay gap

Activists demonstrate for Equal Pay Day in Frankfurt.

The gender pay gap or gender wage gap is the average difference between the remuneration for men and women who are working. Women are generally considered to be paid less than men. There are two distinct numbers regarding the pay gap: unadjusted versus adjusted pay gap. The latter typically takes into account differences in hours worked, occupations chosen, education and job experience.[1] For example, someone who takes time off (e.g. maternity leave) will likely not earn as much as someone who does not take time off from work. In the United States, for example, the unadjusted average female's annual salary has commonly been cited as being 78% of the average male salary, compared to 80–98% for the adjusted average salary.[2][3]

The reasons link to legal, social and economic factors, and extend beyond the 'equal pay for equal work'.[4] (The two terms, gender pay gap, and equal pay are not the same.)

The gender pay gap can be a problem from a public policy perspective even when the reason for the gap is entirely voluntary, because it reduces economic output and means that women are more likely to be dependent upon welfare payments, especially in old age.

Historical perspective

A 2005 meta-analysis by Doris Weichselbaumer and Rudolf Winter-Ebmer of more than 260 published pay gap studies for over 60 countries found that, from the 1960s to the 1990s, raw (aka unadjusted) wage differentials worldwide have fallen substantially from around 65% to 30%. The bulk of this decline, was due to better labor market endowments of women (i.e. better education, training, and work attachment).[5]

Another meta-analysis of 41 empirical studies on the wage gap performed in 1998 found a similar time trend in estimated pay gaps, a decrease of roughly 1% per year.[6]

A 2011 study by the British CMI concluded that, if pay growth continues for female executives at current rates, the gap between the earnings of female and male executives would not be closed until 2109.[7]