The Gender Earnings Gap: Some International Evidence

Abstract

This paper uses micro-data to analyze international differences in the gender pay gap among a sample of ten industrialized nations. We particularly focus on explaining the surprisingly low ranking of the U.S. in comparison to other industrialized countries. Empirical research on gender pay gaps has traditionally focused on the role of gender-specific factors, particularly gender differences in qualifications and differences in the treatment of otherwise equally qualified male and female workers (i.e., labor market discrimination). An innovative feature of our study is to focus on the role of wage structure--the array of prices set for various labor market skills--in influencing the gender gap.The striking finding of this study is the enormous importance of overall wage structure in explaining the lower ranking of U.S. women. Our results suggest that the U.S. gap would be similar to that in countries like Sweden, Italy and Australia (the countries with the smallest gaps)if the U.S. had their level of wage inequality. This insight helps to resolve three puzzling sets of facts: (1) U.S. women compare favorably with women in other countries in terms of human capital and occupational status: (2) the U.S. has had a longer and often stronger commitment to equal pay and equal employment opportunity policies than have most of the other countries in our sample; but (3) the gender pay gap is larger in the U.S. than in most industrialized countries.An important part of the explanation of this pattern is that the labor market in the U.S. places a much larger penalty on those with lower levels of labor market skills (both measured and unmeasured Only Japan with a ratio as low as 50 percent had a consistently larger gap (see Figure 1). This paper uses micrc-data to analyze international differences in the gender pay gap among a sample of ten industrialized nations. We particularly focus on explaining the surprisingly low ranking of the U.S. in comparison to other industrialized countries. An advantage of an international perspective is that countries vary considerably with respect to governmental policies, women's relative labor market qualifications and wage-setting institutions. Such variability allows one to infer reasons for differences in the pay gap and, by implication, the impact of alternative government policies.Empirical research on gender pay gaps has traditionally focused on the role of gender differences in qualifications and of differences in the treatment of otherwise equally qualified male and female workers (i.e., labor market discrimination). Analyses of trends over time in the gender differential within countries as well as intercountry comparisons of gender earnings ratios have tended to emphasize these types of gender-specific factors. An innovative feature of our study is to focus on the role of wage structure as an additional factor influencing the gender gap. To analyze the impact of wage structure, we adapt a framework developed by Juhn, Murphy and Pierce (1991) to analyze trends over time in r...

The Motherhood Penalty in Cross-National Perspective: The Importance of Work-Family Policies and Cultural Attitudes

“…In analyses not shown, we examined the correlation between the Gini coefficient (measuring the dispersion of household income in society) and the size of the motherhood penalties, and found no relationship between overall income inequality and motherhood earnings penalties. 25 This is notable, given the important impact of income inequality on gender gaps in pay (Blau and Kahn 1992, 1996, 2003Mandel and Semyonov 2005), and suggests that motherhood penalties -earnings gaps between mothers and childless women -cannot be explained or easily attributed to larger economic pressures leading to pay inequalities.…”

“…For example, the gender gap in earnings crossnationally is significantly affected by wage distributions (Blau and Kahn 1992, 1996, 2003Mandel and Semyonov 2005). In analyses not shown, we examined the correlation between the Gini coefficient (measuring the dispersion of household income in society) and the size of the motherhood penalties, and found no relationship between overall income inequality and motherhood earnings penalties.…”

The Family Gap in Pay: Evidence From Seven Industrialized Countries

“…A series of studies by Blau and Kahn (1992, 1995 have found that to a large extent, the difference in the gender earnings gap across countries can be explained by the difference in the extent of earnings inequality across countries. Blau (1992) illustrates this by first ranking countries by their gender earnings ratios and then ranking countries by their mean female percentile in the male wage distribution.…”

“…There is a large literature that examines the gender gap in pay within countries and a growing literature that examines the gender gap in pay across countries (see, for instance, Blau and Kahn, 1992, 1995Callan, Adams, Dex, Gustafsson, Schupp, and Smith, 1996). It is taken as given in these literatures that much of the differential between women and men is due to the fact that women bear children and have primary responsibility in most instances for caring or arranging care for them.…”

“…We are grateful to Wen-Jui Han for updating the data series and producing Figure 1 for us. For further information on the sources, see Blau and Kahn (1995), Waldfogel (1998). 3 See also the work of Gornick, Meyers, and Ross (1998) who have examined the differences in institutional structure across a range of industrialised countries.…”