Gender Pay Gap
What is Gender Pay Gap?
The gender pay gap is the average earnings difference between men and women, measured either unadjusted or adjusted for hours, occupation and experience.
Two very different numbers hide behind the phrase, and they are not interchangeable. The unadjusted or raw gap compares the typical earnings of all men with all women, usually among full time workers, so it includes differences in hours, occupation, industry, seniority and time spent out of the labor force. The adjusted gap compares men and women who match on those measured characteristics, and it is substantially smaller than the raw gap, though studies rarely find that it is zero. Both answer real questions: the raw gap describes the overall earnings distribution, while the adjusted gap asks whether like is paid the same as like. A gap is a measurement and discrimination is one possible cause of it, so quoting a single figure as proof either way is a mistake.
Gender Pay Gap: a worked example
Suppose median annual earnings among full time workers are $60,000 for men and $50,000 for women. The unadjusted gap is $10,000: women earn 50,000 divided by 60,000, or about 83 percent of male earnings, a gap of roughly 17 percent. Now compare only workers in the same occupation with the same education, experience and hours, and suppose the comparison narrows to $58,000 against $60,000, an adjusted gap of about 3 percent. Roughly four fifths of the raw gap came from differences in what jobs people hold and how long they work, and about one fifth is left unexplained by those controls.
The mistake students make with gender pay gap
Students hear one headline figure and read it as women being paid less than men for the same job at the same employer. The quoted number is almost always the unadjusted gap across all full time workers, which mixes in occupation, hours and experience, and the adjusted gap is much smaller. The opposite mistake is dismissing the raw gap as meaningless, since differences in occupation and hours are themselves outcomes that need explaining.
Gender Pay Gap questions
What is the difference between the adjusted and unadjusted gender pay gap?
The unadjusted gap compares all men with all women, while the adjusted gap compares men and women with the same measured occupation, education, experience and hours. The adjusted gap is much smaller, because a large part of the raw difference reflects different jobs and different hours. Neither number is wrong, they answer different questions.
Does the gender pay gap prove discrimination?
No, the size of the gap on its own does not prove discrimination. Part of the raw gap is explained by measurable differences in hours, occupation and experience, and what remains after controls could reflect discrimination or characteristics nobody measured. Economists therefore test for discrimination directly instead of reading it off the headline gap.
Why does the gap widen after workers have children?
The gap widens after childbirth because mothers more often cut hours, move to jobs with more predictable schedules, or step out of work for a period, and all three slow earnings growth. Occupations that pay a premium for long and inflexible hours magnify the effect. Economists call the resulting drop in earnings the motherhood penalty.
Related terms
Common comparisons
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