Research Examines Why Women Earn Less Than Men

Today’s women are CEO’s, senators, construction workers, stock brokers, economists and more. Women have made their way into every aspect of the workforce and comprise 46 percent of employees. Yet women consistently earn less than men.

In separate research studies, one Vanderbilt economist has found a disappointing answer to the age-old wage debate, and another has pinpointed which professions are best and worst at pay parity.

Joni Hersch, professor of law and economics, found that even when taking into consideration characteristics that might affect wages, such as choices over household and child-related responsibilities, market characteristics, working conditions, occupational segregation (fields dominated by one sex), experience or job turnover rates, sex discrimination still remained a strong explanation for the gender pay gap.

“If the unexplained pay disparity sometimes favored women and sometimes favored men, there would be no reason for concern,” said Hersch. “But systematically and without exception, finding that women earn less than men raises some questions.”

Hersch’s research found that there is little difference between men and women in how long they stay in a job. “Although women quit more often for family-related reasons, men quit more often to move to another job,” said Hersch.

What about family and housework? Hersch found there is some evidence the presence of children lowers women’s earnings. “But overall the evidence is mixed,” said Hersch. “Any effect varies by education and over the life cycle.” Hersch’s research found that, contrary to popular belief, family and housework responsibilities are not the major cause of the gender pay gap.

Hersch also found that women are almost as likely as men to take high risk jobs.

“Coupled with recent class action sex discrimination litigation involving the securities industry, grocery stores and now Wal-Mart, it’s hard to continue to attribute the remaining disparity to intangibles like effort and motivation and to ignore the possibility of discrimination,” she said.

Does education help level the playing field? Vanderbilt professor of economics Malcolm Getz said “not necessarily.” Getz’s research found earnings of women at every level of education are lower than the earnings of men. Despite this, Getz found female enrollment in college grew from 32 percent in 1950 to 57 percent in 2004.

 “Some argue that, on average, women place a greater value on the non-monetary rewards from education than men do— the opportunity to choose careers for their intrinsic satisfaction, a greater sense of serving broader civic goals and cultural advancement, the pleasure of learning for its own sake. In this view, education pays higher dividends for women than for men even if it doesn’t necessarily lead to financial parity,” said Getz.

Getz’s research found that, in general, women yielded a higher economic value after earning an advanced degree, even though they still earned less than men. “The payoff of professional degrees for women is much greater than for men because the earnings they can expect in other careers are so much lower,” said Getz.

Getz used data from the U.S. Census’s Current Population Survey 1996-2002, to show the sometimes huge financial gaps between men and women. He found that pay disparities are greatest in the fields of accounting, insurance, finance and marketing. In the survey, male accountants made an average of $49,000 a year compared to around $33,000 for women. The average male financial manager earned almost $60,000 compared to less than $40,000 for female financial managers. Even among highly trained, highly educated physicians, men made an average of $94,000 while female doctors earned $69,000.

On the plus side, Getz found that female police officers and engineers earned about the same as their male counterparts, even though there are far fewer women in these fields. He also said that the law profession is getting closer to pay parity.

Hersch’s research was published in Foundations and Trends in Microeconomics. Getz’s research on salaries and the economics of education is included in his new book, Investing in College, a Guide for the Perplexed.

Census Bureau Earnings Exact Numbers 2002
Current Population Survey 1996-2002