There Is No Gender Pay Gap – Even When Pay Is Equal, Incomes Differ

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Men an women do indeed get paid different amounts. It’s been illegal for decades now to pay people different amounts based upon their gender. So, what is going on?

One answer is that it’s the patriarchy. Women are being specifically and deliberately discriminated against. There are a number of problems with this view. Another possible explanation is that men and women simply take different decisions about how they’d like to work.

The thing is, the more we look at this in detail the more we find that it is that second. Even in a heavily unionised job, where it’s the workers who decide the shift patterns, where hourly pay for exactly the same work is the same, we find that women are gaining lower incomes than men.

Why do women earn less than men? Evidence from train and bus operators

Well, why?

Even in a unionized environment, where work tasks are similar, hourly wages are identical, and tenure dictates promotions, female workers earn $0.89 on the male-worker dollar (weekly earnings). We use confidential administrative data on bus and train operators from the Massachusetts Bay Transportation Authority (MBTA) to show that the weekly earnings gap can be explained entirely by the workplace choices that women and men make. Women value time and flexibility more than men. Women take more unpaid time off using the Family Medical Leave Act (FMLA) and work fewer overtime hours than men. Men and women plan to work similar overtime hours when they are scheduled three months in advance, but men actually work nearly 50% more overtime hours than women. Women with dependents value time away from work more than do men with dependents. When selecting work schedules, women try to avoid weekend, holiday, and split shifts more than men. To avoid unfavorable work times, women prioritize their schedules over route safety and select routes with a higher probability of accidents. Women are less likely than men to game the scheduling system by trading off work hours at regular wages for overtime hours at premium wages. Conditional on seniority, which dictates choice sets, the weekly earnings gap can be explained entirely by differences in operator choices of hours, schedules, and routes.

It’s the choices that the workers themselves are making which is producing the gap in incomes.

So, what do we do about this? And given that the trade offs are voluntarily made, why should we do anything anyway?