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October 19, 2006 12:02pm by David Farrar

Why men are paid more?

An interesting article in the Herald-Sun on why men are paid more than women.

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Mike Readman

Screw that! It must be discrimination!
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October 19, 2006 5:39pm
Mike Readman

Screw that! It must be discrimination!
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October 19, 2006 5:49pm
Sean

Pretty obvious really. I don’t know why it keeps popping up in the news here from time to time.
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October 19, 2006 8:11pm
Mill

The reason it keeps popping up is that, until the passage of equal pay legislation in the 1960s and 1970s, employers could legally pay women less than men for exactly the same job. With the removal of legal discrimination, it was expected that the gender pay gap would disappear over time, especially as women’s educational qualifications have increased markedly over the past few decades. At least, that’s what economic theory predicted. Hence, it has been monitored in many countries and also by the OECD.

Yet even on an hourly basis, women’s pay is still only about 85% of men’s in NZ. The gap is much smaller among younger women and men with tertiary qualifications who work full-time, but it’s still there. Since ageing populations will need as much labour as they can get, there is good reason to keep trying to find the reason why women tend to get paid less than men, to make it worth their while to stay in work, even when they have children. Unless the guys want to shoulder all the burden of supporting the oldies themselves, or we drastically increase immigration…

For a more balanced view than Arndt’s, see this:

http://www.smh.com.au/news/opinion/the-boom-economys-biggest-losers/2006/10/10/1160246129160.html
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October 19, 2006 11:32pm
mavxp

That last link (smh) is a bit stupid.
The obvious reason why women who are in academic professions (the example in that article) are occupying the lower levels is descrimination based on age and experience not gender.

When the current Profs were starting out as lecturers their colleagues were probably mostly men. It is just a matter of waiting for the current generation of Profs to retire (probably the next 10 years or so), and you will begin to see the tide turn in that profession toward either balance or women dominating (if indeed they dominate the lecturer and senior lecturer roles currently in that field).

It is also important to note that Professorships go to those who put in the extra time to publish research articles and become renowned in their field of expertise. For women who choose work/life balance they probably will not be publishing as much as male colleagues, and hence will not be seen as the best for the Professorship role. This is discrimination based on proven track record -experience/ expertise and not gender. This latter reason is mentioned in the first article which is a more reasoned viewpoint (IMHO).
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October 20, 2006 8:41am
Owen McShane

Research on this topic in the US confirmed what should be obvious.
The major determinant of earnings per week is the time spent in the workforce.
In other words if I am fifty and have been in the workforce for 35 years I shall earn more than someone with the same qualifications who has been working for six months.
Women began to participate fully in the workforce only recently in historical terms. Hence the average working woman has much fewer years experience in the workforce than the average working man.
However, this gap is rapidly closing and is the major driver of the reduction in wage inequality. Scarcity is important too. The same research showed that a black woman with the same qualifications and the same work experience was paid on average more than her white male equivalent.
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October 20, 2006 9:49am
phillip john

One of the main reason for the gap is that women tend to work in lower paid occupations, (as the article infers). i.e. 25% of women work in the secondary labour market (wholesale, retail, accommodation, cafes and restaurants). Where as this figure is only 20% for men. Also 30% of women work part time jobs (usually lower paid) where as this is only 10% for men. So like the article says it’s mainly about lifestyle choice. Also, a deregulated labour market tends to produce greater labour market segmentation – i.e. low paid jobs become lower paid relative to high paid jobs. This is because higher paid jobs tend to be more insulated from the market than lower paid jobs – i.e. and internal labour market operates where most positions are filled internally (There are also many other reasons). So without unions this effect is intensified. This is why countries with high union density rates generally have a lower gender pay gap.
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October 20, 2006 10:50am
Trouble

Yeah, and the reason why it’s mainly women that give up their financial independence and future earning power in favour of feeding, supervising and cleaning up after small children, is because that’s a special kind of fun that only women can appreciate. Nothing to do with sexist expectations that women take on most of that work, or that their income was lower than their partner’s to begin with, oh no. Lifestyle choice is what it is.

Somehow men manage to get their children raised without having to worry about work/life balance. Women should learn from that if they want to get ahead.

/sarcasm
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October 20, 2006 1:25pm
phillip john

Trouble:

I agree, socially consructed normative ideas about gender role effect these lifestyle choices (the point being that they effectively limit choice), and it is an important point, which I should have made. Thanks for pointing it out.
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October 20, 2006 2:33pm
Porcupine

The article in question is a very interesting example of what in statistics is known as “Simpson’s Paradox” – where you collapse your data (income) over non-independent categories (hours worked, type of job, skill level etc) and come up with absolutely spurious conclusions.
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October 23, 2006 2:05pm
Kimble

Porcupine’s comment is what is known in the blogging world as ‘declaring something as fact without bothering to explain why’.

WHY is the conclusion spurious, Porcy?
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October 23, 2006 2:56pm
observer

“Why is the conclusion spurious, Porcy?”

Because the gender gap cited by Arndt doesn’t take into account differences in hours worked, type of job, skill level, etc.

For further information on Simpson’s Paradox, see this:

http://en.wikipedia.org/wiki/Simpson's_paradox

and, a real example from NZ, this:

http://www.stats.govt.nz/NR/rdonlyres/5DFEE5C8-A969-4684-B95F-FA2AFEDA649A/0/Simpdox.pdf
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October 23, 2006 3:35pm
Porcupine

Thanks observer.
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October 23, 2006 7:15pm
observer

Actually, Porcupine, I don’t think Simpson’s Paradox does apply to the gender wage gap, unless you can demonstrate that at the level of individual occupations, women are paid more than men. That is what the paradox refers to: a result at the most aggregated level being the opposite of that observed at a disaggregated level.
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October 23, 2006 7:44pm
Porcupine

Well according to the article on face value that is what it is saying although I admit there is no real data to back it up. Probably for many cases it is true though – for example I wouldnt be surprised if on an hourly rate basis women beat men because they are generally very responsible workers who focus well on the job at hand, often in more skilled jobs than men.
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October 23, 2006 8:01pm
observer

“I wouldnt be surprised if on an hourly rate basis women beat men because they are generally very responsible workers who focus well on the job at hand, often in more skilled jobs than men.”

That’s pure speculation based on a stereotype.

This is the most thorough NZ study I can find online (there’s another one by the NZIER but it’s not free).

http://www.stats.govt.nz/NR/rdonlyres/943BAFFC-5DFF-4B72-B6AE-1B041A82FDA8/0/explgap.pdf

The conclusion:

Around half of the earnings of both women and men in full-time employment can be explained by
the variables selected for exploration. When the characteristics of 12 of the sub-groups identified are applied in a process of standardisation, the identification of these variables improves the average weekly earnings of women (relative to men) from 0.79 to 0.85, indicating that at least some of the earnings gap can be attributed to structural differences within the full-time workforce. The majority of this improvement occurred when standardised for hours worked. What may be of more interest here is not further quantification of the difference in hours worked between the sexes but rather
attempts to explore the reasons why women work less hours than men in all occupations. The
reasons are likely to be varied and may reflect women’s greater levels of responsibility for childcare,
care of adults, and unpaid work in general, and differing societal roles and expectations. Information from the upcoming 1998/99 Time Use Survey as well as the 1998 Childcare Survey may shed more light on the matter. Alternatively, the information could be used to answer the equally valid question
– “why do men work more hours than women?”.
Overall, the results of this work indicate that personal characteristics such as hours worked, level of highest qualification and age are of some importance in determining earnings while household and family characteristics are not. Consistent with other research in this area, the role of occupation appears not be a main factor. The findings indicate that there are indeed some structural factors associated with the earnings gap (particularly hours worked).
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October 23, 2006 8:20pm
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Very interesting thanks. Hey you can learn heaps on these blogs.
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