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Why Do Women Earn Less?

Bright IdeasSpring 2008  |  Share This  |  E-mail  |  Print  | 
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Women have made their way into every aspect of the workforce and comprise 46 percent of employees. Yet they consistently earn less than men.

In separate research studies a Vanderbilt economist has found a disappointing answer to the age-old wage debate regarding pay inequity, and also has pinpointed which professions are best and worst at pay parity. Research by Joni Hersch, professor of law and economics, found that even when taking into consideration characteristics that might affect wages–such as choices over household and child-related responsibilities, market characteristics, working conditions, occupational segregation (field dominated by one sex or another), experience or job turnover rates–sex discrimination remained
a strong explanation for the gender pay gap.

“If the unexplained pay disparity sometimes favored women and sometimes favored men, there would be no reason for concern,” says Hersch. “But systematically and without exception, finding that women earn less than men raises some questions.”

Hersch’s research found that there is little difference between men and women when it comes to the amount of time they stay in a job. “Although women quit more often for family-related reasons, men quit more often to move to another job,” says Hersch.

What about family and housework? Hersch found some evidence that the presence of children lowers women’s earnings. “But overall the evidence is mixed,” Hersch says.
“Any effect varies by education and over the life cycle.” Hersch’s research found that, contrary to popular belief, family and housework responsibilities are not the major causes for the gender pay gap. She also found that women are almost as likely as men to take high-risk jobs.

“Coupled with recent class-action sex-discrimination litigation involving the securities industry, grocery stores and now Wal-Mart, it’s hard to continue attributing the remaining disparity to intangibles like effort and motivation, and ignore the possibility of discrimination,” she says.

Does education help level the playing field? Not necessarily, says Vanderbilt Associate Professor of Economics Malcolm Getz. Getz’s research found earnings of women at every level of education are lower than the earnings of men. Despite this, Getz found female enrollment in college grew from 32 percent in 1950 to 57 percent in 2004.

“Some argue that, on average, women place a greater value on the nonmonetary rewards from education than men do–the opportunity to choose careers for their intrinsic satisfaction, a greater sense of serving broader civic goals and cultural advancement, the pleasure of learning for its own sake. In this view, education pays higher dividends for women than for men even if it doesn’t necessarily lead to financial parity,” says Getz.

Getz’s research found that, in general, women yielded a higher economic value after earning an advanced degree, even though they still earned less than men. “The payoff of professional degrees for women is much greater than for men because the earnings they can expect in other careers are so much lower,” Getz says.

Getz used data from the U.S. Census’ Current Population Survey 1996-2002 to show the sometimes huge financial gaps between men and women. He found pay disparities are greatest in the fields of accounting, insurance, finance and marketing.

On the plus side, Getz found that female police officers and engineers earned about the same as their male counterparts, even though there are far fewer women in these fields. He also says the law profession is getting closer to pay parity.

Hersch’s research was published in Foundations and Trends in Microeconomics. Getz’s research on salaries and the economics of education is included in his new book, Investing in College: A Guide for the Perplexed.

For more research stories, visit Vanderbilt’s online research news channel, Research News @ Vanderbilt.

 

© 2014 Vanderbilt University

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