Special Topic 8. Earnings Differences Between Men and Women.


Gender based discrimination in employment is one of major causes responsible for differences in wages between men and women. Studies so far conducted in the US have provided enough evidences related to discrimination in employment. Evidences suggest that even after controlling the factors like age, education, preferences, etc., that causes differences in wages between men and women; there still remain some "unexplained" factors. These "unexplained" factors constitute about 5 to 7 percent of the female to male (F/M) ratio of 80 per cent in 2007 and economists' attributes this to discrimination. However, the argument is not that watertight. The very size of the "unexplained" factor in total F/M ratio makes the argument untenable. There are also other factors that cause gender gap in wages. These include: • Age, • Marital status, • Preferences of women whether to take part-time employment or full-time employment, • Education, • Skill level, and • Career objectives of women.

With the increase in the labor participation by married women between 1960 and 1990: a) Many women workers would have entered the labor market with little work experience; hence influx of married women into labor market will lead to decline in the average work experience of women relative to men. b) Since many of the married women also have traditional household responsibilities, therefore they would search for part-time employment. As a result mean hours of work of women relative to men would decline. c) The female/male earnings ratio will fall with married women entering the labor force.

Jobs demanding physical strength, say in construction, do cause differences in wages between men and women. It is because: • Physically demanding jobs offer highly attractive opportunities and is paid highly, and • Males are entering the job market at an earlier age so as to reduce the high opportunity cost which will make them more experienced over time. Yes, jobs demanding physically strength do influence the gender composition of colleges. Many male students leave the college in between so as to join these attractive jobs. As they believe that if they won't leave the job at early age they may forgo the opportunity cost in terms of high salary.

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