monica costa dias robert joyce francesca parodi wage gap geo 180418.pdf · and cannot explain about...

Monica Costa Dias

Robert Joyce

Francesca Parodi

The gender wage gap

Introduction

Will present main results from recent research

• Summarised in accessible Briefing Note: “Wage progression and the gender wage gap: the causal role of hours of work” www.ifs.org.uk/publications/10358

• Detailed in technical Working Paper: www.ifs.org.uk/publications/10356

Builds on some initial descriptive work on the gender wage gap, family formation and career patterns over the lifecycle, which we published and presented here in late 2016

• The main extension is that we have now estimated the causal role of employment experience in driving gender wage gaps over the lifecycle

© Institute for Fiscal Studies

http://www.ifs.org.uk/publications/10358

http://www.ifs.org.uk/publications/10356

Main aims of this research

1. Isolate the causal role of full-time and part-time experience in determining the wages of men and women

2. Draw out the implications for what experience differences can and cannot explain about the gender wage gap over the life cycle

3. Examine how this differs between the top and bottom ends of the labour market (proxied by education level)

This is part of a wider ongoing research agenda at IFS on the gender pay gap and wage/career progression in general

• Will briefly come back to this at the end


Context (1): the hourly wage gap over time All employees, real terms (January 2016 prices)


Labour Force Survey, 1993-2016

0

2

4

6

8

10

12

14

16

18 19

93

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

Mea

n ho

urly

wag

e (£

)

Men (left axis)

Women (left axis)

Context (1): the hourly wage gap over time All employees, real terms (January 2016 prices)


Labour Force Survey, 1993-2016 From Figure 1 of www.ifs.org.uk/uploads/publications/bns/BN223.pdf

0

5

10

15

20

25

30

35

40

45

0

2

4

6

8

10

12

14

16

18 19

93

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

Wag

e ga

p (%

)

Mea

n ho

urly

wag

e (£

)

Men (left axis)

Women (left axis)

Wage gap (right axis)

Context (2): Women’s education levels have been increasing especially rapidly


Labour Force Survey, 1993 and 2016 From Figure 1 of www.ifs.org.uk/uploads/publications/bns/BN223.pdf

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Men, 1993 Women, 1993 Men, 2016 Women, 2016

Perc

enta

ge o

f gro

up Degree

A levels

GCSEs

Context (3): Falls in gender wage gap confined to lower-educated groups; they now exhibit the smallest gap


Labour Force Survey, 1993 and 2016 From Figure 1 of www.ifs.org.uk/uploads/publications/bns/BN223.pdf

0%

5%

10%

15%

20%

25%

30%

35%

GCSEs A levels Degree All

Gen

der w

age

gap

1993 2016

LFS 1993Q1-2017Q2

From Figure 4 of www.ifs.org.uk/uploads/publications/bns/BN223.pdf

0

5

10

15

20

25

20 25 30 35 40 45 50

Hou

rly w

age

(£)

Age

GCSEs

0

5

10

15

20

25

20 25 30 35 40 45 50 Age

A levels

Men

0

5

10

15

20

25

20 25 30 35 40 45 50 Age

Degree

A lifecycle view of wages is an important starting point for understanding inequalities...


LFS 1993Q1-2017Q2.


0

5

10

15

20

25

20 25 30 35 40 45 50

Hou

rly w

age

(£)

Age

GCSEs

0

5

10

15

20

25

20 25 30 35 40 45 50 Age

A levels

Men Women

0

5

10

15

20

25

20 25 30 35 40 45 50 Age

Degree

...because differences in progression are key


BHPS 1991-2008 and Understanding Society 2009-15.


Arrival of the first child is a turning point: not via any sudden jump in the gap, but because it is the start of a long, gradual widening


0

5

10

15

20

25

30

35

40

-5 0 5 10 15 20

Wag

e ga

p (%

)

Years before/since birth of first child

Before birth of first child

After birth of first child

Raw gap

Age-adjusted

Proportion of men and women in paid employment

BHPS 1991-2008 and Understanding Society 2009-15


50%

60%

70%

80%

90%

100%

-5 0 5 10 15 20 Years before/since birth of first child

GCSEs


A levels

Men Women


Degree

Female employment dips sharply after childbirth and this is very persistent; especially for low educated


Proportion of men and women in part-time paid work

Part-time work is defined as no more than 25 hours per week.



0%

10%

20%

30%

40%

50%


GCSEs


A levels

Men Women


Degree

Hours of work are crucial to the story too


Part-time work is defined as no more than 25 hours per week.



Result is a gradual widening of experience gaps after childbirth, similar to evolution of the wage gap Especially full-time experience


0

2

4

6

8

10

12

0 5 10 15 20

Gen

der g

ap (y

ears

)

Years since birth of first child

Full-time experience

GCSEs A levels

-12

-10

-8

-6

-4

-2

0

0 5 10 15 20 Years since birth of first child

Part-time experience

Degree All

We focus on properly understanding the effects of experience on the wage gap

To know how much experience accounts for the gender wage gap, need:

1) Differences in experience between men and women (easy)

2) The effect of experience on wages (hard)

We have a standard “correlation vs causation” issue

• People with different experience might differ in other ways (e.g. ability)

Effectively, we exploit tax-benefit reforms to get around this problem

• Intuition: these change incentives to acquire experience (i.e. to work different numbers of hours) without changing things like ability – so if they affect wages down the line, this can be attributed to experience

• See working paper for details!



Full-time experience has big causal effect on wages – esp. for graduates


0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

0 5 10 15 20

Incr

ease

in h

ourly

wag

e du

e to

ext

ra y

ear

wor

king

full-

time

Years of full-time experience already accumulated

A levels

GCSEs

Degree 6%

3%


So what might gender wage gap be without these differences in hours of work after childbirth?


0%

10%

20%

30%

40%


GCSEs

Actual

0%

10%

20%

30%

40%


A levels

0%

10%

20%

30%

40%

0 5 10 15 20


Degree




0%

10%

20%

30%

40%


GCSEs

Actual

0%

10%

20%

30%

40%


A levels

If women working part-time worked full-time

0%

10%

20%

30%

40%

0 5 10 15 20


Degree




0%

10%

20%

30%

40%


GCSEs

Actual

0%

10%

20%

30%

40%


A levels

If women working part-time worked full-time

0%

10%

20%

30%

40%

0 5 10 15 20


Degree

No gender gaps in rates of full-time or part-time work

Decomposing the difference in hourly wages between mothers and fathers once the first-born child is grown up

Putting that another way...

8

30

0

5

10

15

20

25

30

Gap when first child was born

Gap when first child is aged 20

Hou

rly w

age

gap

(%)




8

30

+8

0

5

10

15

20

25

30


Working mothers more likely to be part-time than

fathers


Hou

rly w

age

gap

(%)




8

30

+8

+3

0

5

10

15

20

25

30



fathers

Mothers more likely to take time out of paid work


Hou

rly w

age

gap

(%)




8

30

+8

+3

+11

0

5

10

15

20

25

30



fathers

Mothers more likely to take time out of paid work

Other factors causing widening

gap after childbirth


Hou

rly w

age

gap

(%)


Summary

Experience matters for wages and it explains a substantial chunk of the gender wage gap, and its evolution over the lifecycle

The huge difference between the effects of part-time and full-time experience is key

• So for policy a priority should be to understand properly why wage progression in PT work is so low

• Of course an alternative/complementary response would be to consider why mothers are so much more likely to work PT in first place


Notes: Shows employment rates for women aged 15-64 with a dependent child under 15 (or under 18 in the US). Part-time employment defined as less than 30 usual hours per week in main job.

Source: OECD (2017), “Dare to Share: Germany’s Experience Promoting Equal Partnership in Families”, https://tinyurl.com/ycvqtcpw

Maternal employment rates across the OECD

0

10

20

30

40

50

60

70

80

90

100

Part-time (%) Full-time (%) Variable hours/other (%)


Summary

Experience matters for wages and it explains a substantial chunk of the gender wage gap - especially its evolution over the lifecycle

The huge difference between the effects of part-time and full-time experience is key

• So for policy a priority should now be to understand properly why wage progression in PT work is so low

• Of course an alternative/complementary response would be to consider why mothers are so much more likely to work PT in first place

But we’ve also shown that focusing on employment or hours of work alone would still leave a significant gender wage gap

• Especially at bottom end of labour market


Next steps in this research agenda

Spatial / local labour market aspects

Mothers work within narrower radius of home after childbirth

• Seems to be especially true of lower-educated

• This may affect a) the kinds of firms and occupations which mothers sort into; b) their bargaining power over wages within a firm

Evidence from elsewhere suggests women do shift to lower-paying firms as they age (Card, Cardoso and Kline 2016)

Strands of research now underway are examining the links between family formation, spatial job search behaviour of women, the matching of female workers to different kinds of firms, and bargaining power over wages


Monica Costa Dias

Robert Joyce

Francesca Parodi

The gender wage gap

monica costa dias robert joyce francesca parodi wage gap geo 180418.pdf · and cannot explain about...

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