What lies behind gender pay gaps?
On November 26th, the International Labour Organization (ILO) delivered its 2018/2019 Global Wage Report that includes a focus on the different underlying causes explaining gender pay gaps. In its simplest form, it corresponds to the difference in average wages between all women and all men who are engaged in paid employment and it is the key indicator to monitor progress of the SDG target 8.5 that aims to achieve “equal pay for work of equal value”.
The main difficulty is to differentiate the explained (not justified) part of the gap (education, type of work, part-time, motherhood, private-public sector…)* to the unexplained one. The figure hereunder shows the decomposition of the gender pay gap for a selection of countries on the hourly wage distribution. Each chart shows three components at each quantile, which together represent the explained and unexplained parts of the gap. Among the elements of the explained part we single out “education”, so that the second component, labelled “other factors”, represents the explained part, minus the specific element “education”. The sum of the three parts at each quantile represents the gender pay gap at that quantile.
Decomposition of the gender pay gap, isolating the explanatory effect of education (extract)
It appears that education is not an explainable factor for Canada and that the unexplained part is very important in intermediate wages. In Cyprus or Hungary, the picture is slightly different: at the bottom of the distribution, the gender pay gap can be explained by differences in attributes and characteristics, but in the upper parts of the distribution it remains unexplained. In Spain (not in the figure), almost all the gender pay gaps are unexplained.
Then, the most appropriate mix of policy responses will differ across countries, depending on which factors have the largest impact on the gender pay gap in each national context, but regarding the structurally remaining unexplained part, there are still some efforts to be made in decreasing the cultural bias that women’s work value is below that of men’s.
Labour market endowments, attributes and characteristics for the decomposition of the gender pay gap*
Emeric Nicolas, Head of Data Science Dpt.