The Gender Pay Gap Cannot Be Written off as Mere Self Selection

A new study published in Nature Human Behaviour contradicts earlier research suggesting that the pay gap in many advanced, industrialized countries is due primarily to gendered job segregation. While this remains an important factor, the article “Within-job Gender Pay Inequality in 15 Countries,” co-authored by IESE Business School Professor Marta Elvira, reveals that women still earn less than men do even when they hold the same position in the same company. Previous research concluded that sorting into certain jobs — for example, women as teachers and nurses and men as bankers and business managers — accounted for much of the gender pay gap. Concerned that “data that can identify women and men who do the same work for the same employer are rare, and research informing this crucial aspect of gender differences in pay is several decades old and from a limited number of countries,” a group of scholars used recent linked employer–employee data from 15 countries to challenge earlier conclusions. Their study suggests that gender still accounts for approximately half of the pay differences reported when comparing the same jobs in the same occupations in the same firms.

According to the research, based on millions of data points from 15 countries, the basic pay differences for women range from 9.9% in Hungary to 40.6% in South Korea, adjusting for multiple pay determinants such as differences in age, education and full/part-time status. They discovered that the pay gap within the same job — or pay for jobs that are substantially the same, for the same employer — the difference is always smaller, but still relevant (9.5% in Hungary and 18.8% in South Korea, for instance). In Spain, women earn 12.1% less than do men doing the same work for the same company. In the United States, the difference is 14.1%.

“That is not to say that there hasn’t been progress. We looked at earnings over the course of 10 years, and saw progress in narrowing the gap in every country under study,” Elvira explained. Yet, she continued, “None achieved salary parity, despite the fact that in many of these countries, women are entering the workforce in greater numbers, holding more advanced degrees and counting on expanded legal rights.” The researchers thus conclude that policies mandating equal pay have an important role to play in creating gender equality in the labor market. In Elvira’s words, “Organizations and their managers matter, and can do their part in creating fairer and more equitable workplaces.”

Consequently, the findings of the study suggest that policies focusing on equal pay for equal work and policies attending to hiring, promotion and other job-sorting processes are both vital to establishing gender equality in the labor market. At the same time, the authors conclude that organizations can still review their own hiring and promotion practices to ensure less-gendered occupations and jobs, as well as questioning “societal views regarding whose work is defined as valuable.” According to Elvira, “For companies, taking a careful look at their human resource policies, from the hiring process through to promotion, is important,” asking, “Do certain jobs normally go to men and others to women? How are those jobs valued? Are women regularly hired at lower salary levels, which stay with them as they’re promoted? Are all individuals doing essentially the same job compensated equally?”

Gender differences in earnings

You can read and download the article for free at Nature.com