Should we mind the gap?

Men working full-time currently earn about 17% more per hour than women working full-time. This gender pay gap is widely held to reflect systematic bias against women in the labour market.

But when you disaggregate the statistic you find some odd differences within the male and female population that can’t be accounted for by employer prejudice.

Though married men earn more than married women, single women earn the same or, as they get older, more than single men. And there are other big differences.
 
For instance, Bangladeshi women earn more than a quarter more than Bangladeshi men, while gay men earn more per hour on average than “straight” men, and lesbians earn more than heterosexual females. These findings hardly support the hypothesis that labour markets are seething pits of discrimination.

So what accounts for the existing pay gap?  Should We Mind the Gap? shows that the pattern of pay is certainly more complicated than politicians think. Pay differences arise, for example, from variations in the fields people work in. The jobs men do tend to be less stable, more dangerous and involve longer commutes. Men are also more likely to work outside, to work long hours and unsocial hours. Inevitably pay will reflect this.

 
Moreover, women’s career preferences differ dramatically from men’s. Of the top 25 preferred graduate jobs for women in a recent survey, 12 were in the public or voluntary sectors, where very high pay is unusual, as against just four of men’s top 25. Career choices are bound to affect pay significantly over a working life.

 
Given the complex causes of the gender pay gap, it is clear that complete equality of pay is unlikely to be achieved without draconian measures that would restrict freedom of choice and damage the economic prospects of both men and women. Calls for new legislation on equal pay should therefore be resisted.

We are currently being told that Keynes is back in fashion; so this Hobart Paper is most timely. It provides a detailed exposition of the potential dangers of using simplistic aggregates to justify policy decisions.

The irony is that discrimination is much more likely in the sort of markets that the corporatist supporters of equal pay regulation like: big monopoly trades unions (which used to be very sexist), large conservative monopsonistic private employers and a big role for the public sector (which used to discriminate explicitly). Perhaps they understand the weaknesses in the institutions that they support themselves.

We are currently being told that Keynes is back in fashion; so this Hobart Paper is most timely. It provides a detailed exposition of the potential dangers of using simplistic aggregates to justify policy decisions.

The irony is that discrimination is much more likely in the sort of markets that the corporatist supporters of equal pay regulation like: big monopoly trades unions (which used to be very sexist), large conservative monopsonistic private employers and a big role for the public sector (which used to discriminate explicitly). Perhaps they understand the weaknesses in the institutions that they support themselves.

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