Gender and Pay

Wage gap shrinks

In January, President Barack Obama announced rules requiring companies with over 100 employees to report data on their gender pay practices—part of a plan to equalize male and female pay. A new study for the National Bureau of Economic Research, conducted by two Cornell economists, delves into the latest data on, and provisional explanations for, such pay differentials.

It finds the measured gap has shrunk considerably: Female wages were roughly 64 percent of male wages in 1980, but that figure had grown to 82 percent by 2010. The gap narrowed more in lower wage percentiles than the top one, leading the authors to conclude that "developments in the labor market for executives and highly skilled workers especially favored men."

Because of the huge gains in higher education and work experience for women since 1980, the share of the wage gap that can be explained by men having more "human capital" had shrunk to 8 percent by 2010, compared to 27 percent in 1980. The particular occupation and industry choices women make (or are presented with) now explain half the existing gap.

Women are less willing to work very long hours, the authors find, which also plays a significant role. But parts of the gap remain unexplained by obvious factors like these, which "suggests, though it does not prove, that labor market discrimination continues to contribute to the gender wage gap." Since that unexplained gap is decreasing, that suggests, but doesn't prove, that such discrimination is decreasing as well.