<p>Quite simple. If women are paid less, then that's because people believe their work to be worth less. The same believe, that womens work is worth less, then stops employers from hiring more women.</p>
<p>(Please note that I don't endorse this view. It is, however, the most simple explanation inside of the assumptions made by the question. Also, as a plus, this would mean that employers hiring more women have an inherent advantage.)</p>

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2021-03-15T14:58:29.080Z
Comments are not for extended discussion; this conversation has been [moved to chat](https://chat.stackexchange.com/rooms/120877/discussion-on-answer-by-donquikong-if-women-are-paid-less-for-the-same-work-why).
1muflon1
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2021-03-13T09:01:35.423Z
2021-03-13T09:01:35.423Z
DonQuiKong
<p>Because women are not paid less for the same work when all the variables are taken into equasion.</p>
<p><sub>Caveat: below answer is a nearly verbatim copy <a href="https://politics.stackexchange.com/questions/16093/why-is-the-gender-pay-gap-so-large-in-the-united-states-despite-the-equal-pay-ac/16096#16096">of my earlier answer on Politics.SE on the topic</a></sub></p>
<p>In short, the much-cited &quot;77 cents&quot; figure is from the &quot;lies, big lies, and statistics&quot; department of political propaganda.</p>
<h1>The real unexplained wage gap is 94%, and it shrinks to nothing in many cases especially if you normalize for child care (e.g. only compare childless women's and not all women's earnings).</h1>
<blockquote>
<p>The AAUW has now joined ranks with serious economists who find that when you control for relevant differences between men and women (occupations, college majors, length of time in workplace) the wage gap narrows to the point of vanishing. The 23-cent gap is simply the average difference between the earnings of men and women employed “full time.” What is important is the “adjusted” wage gap-the figure that controls for all the relevant variables. That is what the new AAUW study explores. (<a href="http://www.huffingtonpost.com/christina-hoff-sommers/wage-gap_b_2073804.html" rel="noreferrer">source: Huffington post</a>, citing Association of University Women (AAUW) study &quot;<em><a href="http://www.aauw.org/research/graduating-to-a-pay-gap/" rel="noreferrer">Graduating to a Pay Gap</a></em>&quot;)</p>
<p>The AAUW researchers looked at male and female college graduates one year after graduation. After controlling for several relevant factors (though some were left out, as we shall see), they found that the wage gap narrowed to only 6.6 cents.</p>
</blockquote>
<ul>
<li><p><em>So, is it due to discrimination?</em></p>
<p>As per above, of the &quot;23 cents&quot; gap, 17 is 100% definitely <strong>has nothing to do with discrimination at all</strong>.</p>
<p>The researchers honestly admit that they <strong>don't know how to explain the remaining 6%</strong> (as in, at the moment <strong>they can't attribute it to discrimination</strong>).</p>
<blockquote>
<p>How much of that is attributable to discrimination? As AAUW spokesperson Lisa Maatz candidly said in an NPR interview, “We are still trying to figure that out.”</p>
</blockquote>
<p>Interestingly, if you look at younger generation, at least in the UK, not only does the pay gap disappear, but it <a href="http://www.telegraph.co.uk/women/womens-business/11042829/Women-gender-pay-gap-want-to-close-the-pay-gap-Its-time-to-face-an-uncomfortable-truth.html" rel="noreferrer">reverses itself to men's disadvantage</a>:</p>
<blockquote>
<p>The latest report from the Office of National Statistics is even more conclusive: the gender pay gap effectively doesn’t exist between the ages of 18 and 39. Between the ages of 22 and 29, women marginally out earn men.</p>
</blockquote>
</li>
<li><p>So what can <em>possibly</em> explain it? Without outright assuming it's discrimination due to your own political biases?</p>
<p>The same Telegraph article linked in the last paragraph has a possible explanation:</p>
<blockquote>
<p>However, it's impossible to ignore the fact that men's wages start outstripping women in the years after most people have children.<br />
And if that hasn’t convinced you, research by Essex University and the London School of Economics has indicated that lesbians out earn straight women.<br />
<strong>All the evidence points towards a gender pay gap that is, in part, driven by childcare rather than sexism</strong>. This doesn’t mean that we shouldn’t care about closing the pay gap – but it does make the situation more complex.</p>
</blockquote>
<ul>
<li><p>Another interesting theory I heard proposed (though never saw any research conclusively backing it up) was that one possible factor is <a href="https://www.ncbi.nlm.nih.gov/pmc/articles/PMC4164392/" rel="noreferrer">much higher prevalence of males among high-functioning autism diagnoses</a>. There are <a href="https://www.psychologytoday.com/blog/my-life-aspergers/201008/affluence-and-autism-cause-and-effect-or-not" rel="noreferrer">plausible reasons</a> to suppose that there might be causative explanations.</p>
</li>
<li><p>Additional theory (again with no research support I'm aware of) rests on the fact that men generally are more risk-taking than women.</p>
<p>If a risk is taken and pays off, that makes the person high-performer and they usually would get paid more.</p>
<p>If a risk is taken and fails, you usually don't get paid less (although in edge cases you get fired but that's rare unless one was Lehman Brothers level reckless).</p>
<p>To be successful, a company needs to be agile - which means internal experimentation and risk taking.</p>
</li>
</ul>
</li>
</ul>
<h1>In other words, the short answer is that the reason employers don't hire just women because it would not lead to increased financial performance based on reality. An overwhelming majority of the wage gap has valid rational economic explanations that have nothing to do with biases or sexism.</h1>
<p>The only way you can reliably have a wage gap arbitrage is by hiring women with kids - but then you either have to invest more to help them be more productive (e.g. on premises company sponsored child care) - which eats into your arbitrage and likely eliminates it, OR, have employees who by necessity are less productive on average. Being a parent may be a great net benefit to society (after all - those parents are raising people who will be paying for your retirement!), but unfortunately it does objectively bring less value to the company due to less overtime, more time off, distractions etc... Most normal human being evolved to value their children more than company's bottom line.</p>
<p>By the way, I can't find a cite now but I vaguely remember that some companies in USA in the past actually managed to succeed at this exact option (provide extra child care support, and have more productive and successful operations due to attracting high quality workforce who would otherwise not be able to work).</p>

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2021-03-13T23:37:18.837Z
"women are not paid less for the same work" + "The real unexplained wage gap is 94%". So, which is it?
njzk2
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2021-03-13T23:39:54.143Z
*"An overwhelming majority of the wage gap has valid rational economic explanations"* - the existence of an economic rationale, does not establish that the structure of the system itself, in which differentials emerge as "rational", is not discriminatory precisely because discrimination becomes rational rather than irrational in such a system. Nor that those who attempt to resist change to that system do not have discriminatory motives. For example, stiff criminal penalties can quickly make discrimination irrational, but their imposition is resisted due to discriminatory attitudes.
Steve
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2021-03-14T01:26:47.440Z
@njzk2 - women are paid less for different work. The problem is that women DO different work (in various ways) which does result in lower pay. In other words, the answer to OP's question is "because women aren't paid less for the same work, all other things being equal". There is no research to clearly explain 94% gap, but the most obvious and likely largest part of that gap is child rearing, which is nearly impossible to make "same" between men and women (and the only countries that tried - nordic - found MORE wage gap than the others) - and that gap reason makes it impossible to arbitrage
DVK
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2021-03-14T11:40:53.727Z
Why would autism being more common in men explain women having lower incomes? Autistic adults have an 86% unemployment rate. Higher rate of autism would therefore lower the average income, not increase it.
Ettina Kitten
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2021-03-14T14:04:55.240Z
@DVK 94% is after normalizing for occupation. Women are paid less for the same work. "There's no research but it's obvious" is, obviously, not an answer.
njzk2
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2021-03-14T14:38:17.017Z
@EttinaKitten - there's a difference between full on autism (where you can't function) and high functioning autism (which usually is Aspergers) where a person is perfectly employable. Think Einstein or Bill Gates (who many experts agree are on the spectrum, with the usual caveat of diagnosing people by proxy). Being able to zone in on programming or other high-paying skill for 16 hours a day is easier for an Aspie than for a neurotypical, which in the modern world translates to higher chances to get well paid.
DVK
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2021-03-14T14:44:21.003Z
@njzk2 - I'm sorry, if you don't understand that "occupation" is not same as "work", I can't explain it in comments. It's easy to control for occupation as that is a very discreet and obvious to measure variable. It simply isn't enough for real economics.
DVK
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2021-03-14T15:46:41.307Z
@DVK if that's the explanation, that occupation and work are different, then why do you claim that "the unexplained wage gap is 94%" (should be 93.4, by your own numbers, btw, thanks for the rounding, which is not nothing)? Seems like that should be your explanation, no, that the researchers are failing to normalize because they don't understand what work is?
njzk2
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2021-03-14T21:30:22.143Z
@EttinaKitten because the income statistic in question is conditioned on employment.
Karl Knechtel
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2021-03-15T00:04:15.670Z
@njzk2 - researchers don't aren't failing to normalize. People who push questionable political goals based on misinterpreting research do. Researchers did normalize which is when they came up with 94% gap instead of 77%; and as you see from another link, NO gap (or slight gap towards women in UK) when they also normalize away parenthood as a variable.
DVK
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2021-03-15T21:32:12.760Z
@DVK, so, parenthood is a variable? how does that work? can you remove parenthood and keep "all else being equal"? How do you know that 94% comes from misinterpreting research, or having political goals? Do you have studies to back that claim?
njzk2
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2021-03-16T00:08:35.777Z
@DVK I know that. 60-90% of people on the autism spectrum are high functioning, so that 86% unemployment rate includes many high functioning individuals, too. Being smart and verbal and good at focusing doesn't necessarily mean you're employable.
Ettina Kitten
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2021-04-12T13:14:52.270Z
Just need to point out that my employer has on-site child care and is far from being insolvent.
RedSonja
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2021-04-12T14:52:24.153Z
@RedSonja - (1) smaller employers would have far harder time to organize this. (2) The first time some incident happens, a lawsuit would wipe out the company. (3) There are not enough qualified child care providers overall - hence, the more you open this, the more expensive it will be to hire caregivers. There are other challenges as well. It's NOT as simple an issue as it appears to be (which is not to say it is not 
 possible to address)
DVK
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2021-03-13T19:57:31.617Z
2021-03-13T20:14:19.097Z
2021-03-13T20:14:19.097Z
DVK
<p>It has been shown <a href="https://www.nytimes.com/2017/05/13/upshot/the-gender-pay-gap-is-largely-because-of-motherhood.html" rel="noreferrer">numerous times</a> that the apparent pay gap is largely due to women having to work part time or take time off for maternity leave, and that the gap is correspondingly in a narrow age range (I believe mid 20's +/- a few years). However, the statistic is often spun by computing hourly rates and averaging everybody together, and &quot;women make less in general&quot;, despite being quoted often, is a myth.</p>
<p>It's often referred to more accurately as the &quot;motherhood penalty&quot;.</p>
<p>Therefore, hiring more women would not save a company money. What it would do is ultimately require more employees to fill in for time off if any of the female employees took maternity leave, or it would raise the number of part time employees.</p>

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2021-03-13T19:35:48.310Z
2021-03-13T19:35:48.310Z
Jason C
<p>This is an interesting question, and I don't have a good answer. Just pointing out about the second part that the canonical labour market model of Diamond-Mortensen-Pissarides views a labour market contract in terms of matching, when a surplus is shared between employer and employee through a nash bargaining mechanism. So, earning less does not necessarily mean lower marginal product in theory. Still the question of why employers do not anticipate having to end up in a higher bargained wage when they employ men and thus prefer to employ more women is very interesting. I am not aware of any literature on this. Maybe the ability to bargain better is part of skill and thus compensated? (No intention to offend anyone here, but there is quite a bit of literature showing that men are more successful in bargaining higher wages, for example <a href="https://onlinelibrary.wiley.com/doi/abs/10.1111/ecin.12060" rel="noreferrer">Dittrich et al. (2014)</a>, <a href="https://academic.oup.com/qje/article-abstract/131/2/633/2606904?redirectedFrom=fulltext" rel="noreferrer">Card et al., 2015</a>. Neither the literature nor me though saying that this is main cause of the wage gap).</p>

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2021-03-12T18:58:35.213Z
2021-03-13T18:18:33.890Z
2021-03-13T18:18:33.890Z
Papayapap
<p>This is a very good question and I agree with the answer about the 'wage gap'. Education is a point that I want to add here.</p>
<p>A survey was recently conducted in the construction labour market in China. Women have relatively low hourly salary than men. We may think this's because women are not able to carry heavy materials. On the contrary, the majority of the workers carrying heavy materials are women. Those who in charge of the technical work are men majorly, and they have a better salary.</p>
<p>Is this because women are not capable of the work? No. Those female skilled workers can work as good as men. But very few women were taught to do technical works before. The 'masters' don't accept female apprentice just for 'tradition' reasons.</p>
<p>What we are doing now is to make equality to be a tradition of the future. Men and women have equality in education, and then equality in the job market.</p>
<p>Reference (in Chinese): <a href="https://www.zhihu.com/question/358322493" rel="noreferrer">https://www.zhihu.com/question/358322493</a></p>

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2021-03-13T18:08:24.800Z
2021-03-13T18:08:24.800Z
Metis533
<p>I must preface that the original question as it stands is way too broad.</p>
<p>It probably needs to be cut down into smaller parts, but that's hard to know how to do if you are a layperson. This question really is an enormous one, and although there are a lot of answers that give bits and pieces of info, because the question is so broad, there are going to be lots of opportunities for people to answer this question with a heavy slant one way or another, with varying quality of information. It's easy to cite a few papers in isolation and present it as the smack down conclusion for one side or another.</p>
<p><strong>Is there gender discrimination?</strong></p>
<ul>
<li><p><em>Women are paid less than men for various reasons, and it's
complicated.</em></p>
</li>
<li><p><em>Some of it is gender discrimination, and some of it isn't.</em></p>
</li>
<li><p><em>It's very easy to misconstrue how strong or weak gender
discrimination's impact is.</em></p>
</li>
</ul>
<p>Even if the total pay differential explained by discrimination was only 3-5% as some people so far have suggested (it is almost certainly not), that is still often the equivalent of two or three raises at a job. I remind everyone participating in this discussion to be civil, according to the rules of the site, and not to use the presentation of &quot;objective fact&quot; as an excuse to be untactful or ungraceful with how you present your case.</p>
<p>Let me give my best effort to scratch the surface of this question. I try to provide direct, un-paywalled PDF links to papers where I can. Otherwise I will link paywalled links to the papers.</p>
<p>For now, I will only discuss a few of the papers provided below, and will leave the other papers as relevant further reading. Some of the papers are much  more technical than others, and some papers probably can be left as further reading, rather than having any additional commentary. I will also consider making this answer a community/wiki answer, so that others may provide good commentary on the extra papers, or provide new papers that I have missed, since there are so many papers that are relevant to this topic.</p>
<hr />
<p><em><strong>Labor Demand and Labor Supply</strong></em></p>
<hr />
<ul>
<li><strong>Sullivan (1989)</strong> <em><a href="https://www.nber.org/system/files/working_papers/w3031/w3031.pdf" rel="noreferrer">Monopsony Power in the Market for Nurses</a></em></li>
</ul>
<p>Sometimes pay differentials are attributed to a &quot;taste for discrimination&quot; as it is known in the literature (either by consumers or employers). The existence of monopsony power, which is where there is not perfect competition for the supply of labor and an employer can push wages below the marginal product of labor (the value of your work), may be an alternative explanation for a wage differential.</p>
<p>There is evidence that monopsony power does exist in markets such as the nursing industry. Nurses may see hospitals as highly differentiated (different labor practices, safety, location, etc.), and &quot;wage standardization&quot; programs may effectively amount to collusion to depress wages among hospitals.</p>
<p>If monopsony power by firms depresses wages though, then this raises the question: Does it do so equally for men and women?</p>
<ul>
<li><p><strong>Ransom and Oaxaca (2010)</strong> <em><a href="https://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.322.3677&amp;rep=rep1&amp;type=pdf" rel="noreferrer">New Market Power Models and Sex Differences in Pay</a></em></p>
</li>
<li><p><strong>Hirsch, Schank, and Schnabel (2010)</strong> <a href="https://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.583.9947&amp;rep=rep1&amp;type=pdf" rel="noreferrer"><em>Differences in Labor Supply to Monopsonistic Firms and the Gender Pay Gap: An Empirical Analysis Using Linked Employer-Employee Data from Germany</em></a></p>
</li>
</ul>
<p>These are two papers that study pretty different markets (US grocery stores data and  German employer-employee data), but both try to achieve the same goal of estimating the labor supply elasticity between men and women. That is, can firms exert more wage pressure on one group compared to another? The interesting thing about these studies is that they look at how elastic both groups are at the level of the firm, and not just at the level of the market. What does this mean?</p>
<p>In the labor market as a whole, women are usually observed to be more elastic than men, implying that for one reason or another, they are more sensitive to wage differences. Does this mean they can afford to be choosier with which jobs they take? Well, once workers are <em>within</em> the firm, for some reason women then are less elastic than men, which means that the firm has greater wage setting power over women due to monopsony power. From the second paper:</p>
<blockquote>
<p>Our results imply that about one third of the gender pay gap might be
wage discrimination by profit-maximizing monopsonistic employers.</p>
</blockquote>
<p>The second paper tries to build off previous work (including some from the authors of the first paper) by trying to model search frictions. They do not wish to assume that transitioning to and from non-employment is wage-inelastic (that wages do not affect how easy it is to quit and look for a better offer). An open question that these papers don't answer is why exactly women may end up being more inelastic than men, more unwilling to quit jobs that may underpay them.</p>
<p>But despite the healthy caution the paper gives as to how much of a role gender discrimination plays, consider the note from the second paper:</p>
<blockquote>
<p>Whereas  Robinsonian  discrimination  provides  a  relatively  simple
explanation  for the persisting empirical regularity of the gender pay
gap, it is difficult to interpret this  pay  gap  as  a  long-run
equilibrium  outcome  using  Becker’s  (1971)  concept
of discrimination due to distaste without assuming some sort of market
power on the demand-side. Moreover, employers’ actions remain
profit-maximizing when engaging in Robinsonian discrimination, whereas
they are biased by costly prejudices when engaging in discrimination
due to distaste because their profits are reduced in this case  even
if  employers  have  considerable  monopsony  power  (see,  e.g.,
Bowlus  &amp; Eckstein 2002)</p>
</blockquote>
<p>This means that when you consider older models of price discrimination (e.g. Becker), where discrimination due to distaste is mostly waved away due to the desire to be profit-maximizing, those models consistently don't hold up in real life, and models that include explicit discrimination (e.g. Robinson) are more consistent with what we actually see in the data.</p>
<ul>
<li><strong>Cherchye, De Rock, and Vermeulen (2012)</strong> <em><a href="https://www.aeaweb.org/articles?id=10.1257/aer.102.7.3377" rel="noreferrer">Married with children: A collective labor supply model with detailed time use and intrahousehold expenditure information</a></em></li>
</ul>
<p>(<em>I do not provide a pdf to the 2010 version as there seem to be significant changes between that paper and the final copy in 2012. I cannot currently find a straight link to the 2012 copy.</em>)</p>
<p>This paper looks at improving traditional models of household production in a few ways, with one of them being by modelling child outcomes as a public good. As a whole it looks into a big question: if the wages of a mother or father changes, how does that affect who takes care of children, and does the gender of the parent matter in child outcomes? That is, is it better to empower men or women if looking to raise child welfare?</p>
<p>One reason people argue that the wage differential between men and women isn't inherently gender discrimination is because women naturally prefer to stay at home and say, take care of children, or commit themselves more to household production. Then, rational employers who are profit maximizing may pay a woman and man of equal skill differently because they expect the women may end up working for fewer hours in the future, even if the woman currently is unmarried or has no kids. Before going any further, it must be noted that this reasoning by itself would constitute statistical discrimination, which has its own literature.</p>
<p>However, this paper makes some interesting empirical findings regarding the household production angle. Men and women do have different preferences for what things to work on for household production, including childcare, and when you look at who is more effective at childcare, the authors find that given equal time with kids, an extra unit of time spent with the children is slightly more effective if done by the mother than with the father. So far seems normal, right?</p>
<p>But because there is such a large disparity between how much time the father and mother spend time with children, it would be more effective to empower men (!) to spend more time with children. If you look at the effects of raising a father's wage  compared to the wife, what happens is that the man spends more time working and less on both childcare and other household production. The woman will spend more time on both market labor, childcare, and other household production, with less time in leisure.</p>
<p>Therefore, large pay differentials can adversely affect child outcomes, because if firms acting in such an aforementioned &quot;profit-maximizing&quot; way end up paying men and women of equal skill differently, it will not account for public goods such as childhood outcomes. The problem gets more complicated when you consider what happens when a wife's wage increases compared to the husband's wage. If the woman's initial wage is low, wage increases will actually decrease market production, until the wage is increased to around the average wage.</p>
<p>Modelling a household's use of time is very complicated. You cannot perfectly explain away the gender pay gap using just household preferences.</p>
<ul>
<li><p><strong>Rosenzweig and Schultz (1985)</strong> <em><a href="https://www.jstor.org/stable/1818641" rel="noreferrer">The Demand for and Supply of Births: Fertility and its Life Cycle Consequences</a></em></p>
</li>
<li><p><strong>Goldin and Katz (2012)</strong> <em><a href="https://dash.harvard.edu/bitstream/handle/1/2624453/Goldin_PowerPill.pdf?sequence=4&amp;isAllowed=y" rel="noreferrer">The Power of the Pill: Oral Contraceptives and Women’s Career and Marriage Decisions</a></em></p>
</li>
</ul>
<hr />
<p><em><strong>Human Capital Investment</strong></em></p>
<hr />
<ul>
<li><strong>Dougherty (2005)</strong> <em><a href="http://eprints.lse.ac.uk/20034/1/Why_is_the_Rate_of_Return_to_Schooling_Higher_For_Women_Than_For_Men.pdf" rel="noreferrer">Why is the Rate of Return to Schooling Higher for Women than for Men?</a></em></li>
</ul>
<p>What can be attributed to the differences in the rate of return on education between men and women? Even when controlling for personal characteristics, women are paid less than men, and part of the reason for the increased rate of return women have to schooling, is that better educated women seem to be better equipped to deal with discrimination. This paper dis-aggregates an index of discrimination using Oaxaca decompositions based on years of schooling, in order to make this point. Not all of the difference in the rate of return to schooling is attributable to discrimination however. Women choose to work in sectors where education is highly valued.</p>
<ul>
<li><p><strong>Henderson, Polachek, and Wang (2011)</strong> <em><a href="http://citeseerx.ist.psu.edu/viewdoc/download;jsessionid=6E1ABD4EFFB157B6136204D5581EED2A?doi=10.1.1.484.4213&amp;rep=rep1&amp;type=pdf" rel="noreferrer">Heterogeneity in Schooling Rates of Return</a></em></p>
</li>
<li><p><strong>Mincer and Polachek (1974)</strong> <em><a href="https://www.nber.org/system/files/chapters/c3685/c3685.pdf" rel="noreferrer">Family Investments in Human Capital: Earnings of    Women</a></em></p>
</li>
</ul>
<hr />
<p><em><strong>Compensating Wage Differentials and Discrimination</strong></em></p>
<hr />
<ul>
<li><p><strong>Blau and Kahn (2003)</strong> <em><a href="http://ftp.iza.org/dp2176.pdf" rel="noreferrer">The US Gender Pay Gap in the 1990s: Slowing Convergence</a></em></p>
</li>
<li><p><strong>Goldin and Katz (2006)</strong> <em><a href="https://www.nber.org/system/files/working_papers/w12139/w12139.pdf" rel="noreferrer">The Homecoming of American College Women: The Reversal of the College Gender Gap</a></em></p>
</li>
<li><p><strong>Hammermesh and Biddle (1994)</strong> <em><a href="https://www.ux1.eiu.edu/%7Elsghent/hamerbiddle.pdf" rel="noreferrer">Beauty and the Labor Market</a></em></p>
</li>
</ul>
<p>From the abstract:</p>
<blockquote>
<p>Better-looking people sort into occupations where beauty may be more productive; but the impact of individuals' looks is mostly independent of occupation, suggesting the existence of pure employer discrimination.</p>
</blockquote>
<ul>
<li><strong>Oaxaca and Ransom (1994)</strong> <em><a href="https://www-perso.gate.cnrs.fr/goffette-nagot/l3econometrie/OaxacaRansom_DiscriminationWageDifferentials_JEconometrics1994.pdf" rel="noreferrer">On discrimination and the decomposition of wage differentials</a></em></li>
</ul>
<hr />
<p><em><strong>Statistical Discrimination</strong></em></p>
<hr />
<p>Most work on statistical discrimination focuses on race. Suggestions for work more focused on gender are particularly appreciated.</p>
<ul>
<li><strong>Arrow (1973)</strong> <em><a href="https://www.jstor.org/stable/j.ctt13x10hs" rel="noreferrer">The Theory of Discrimination</a></em></li>
</ul>
<p><em>(This is from a larger book on labor market discrimination.)</em></p>
<ul>
<li><strong>Lang and Lehmann (2012)</strong> <em><a href="https://www.nber.org/system/files/working_papers/w17450/w17450.pdf" rel="noreferrer">Racial Discrimination in the Labor Market: Theory and Empirics</a></em></li>
</ul>
<p><em>(This paper may also fit in the section below.)</em></p>
<p>Statistical discrimination based on rational stereotypes are not sufficient to explain differentials in employment duration.</p>
<ul>
<li><p><strong>Schwab (1986)</strong> <em><a href="https://www.jstor.org/stable/1804140?seq=1" rel="noreferrer">Is Statistical Discrimination Efficient?</a></em></p>
</li>
<li><p><strong>Bielby and Baron (1986)</strong> <em><a href="https://www.journals.uchicago.edu/doi/abs/10.1086/228350" rel="noreferrer">Men and Women at Work: Sex Segregation and Statistical Discrimination</a></em></p>
</li>
<li></li>
</ul>
<hr />
<p><em><strong>Non-Wage Discrimination</strong></em></p>
<hr />
<p>Not all discrimination is through wages. The heavy use of wage equations in the discrimination literature leaves some gaps when it comes to non-pecuniary benefits, discrimination in offers, unemployment duration, risk of non-employment, hours offered, etc.</p>
<p>For example, consider if all men and women of equal skill have the same cutoffs for when they would accept or reject a job. Men and women of the same skill then have a different distribution of offers they may receive due to discrimination, with men receiving on average higher offers. Then over time, one would observe that men and women will select into jobs that pay based on their skill, with some gap because men on average may get better offers. The magnitude of discrimination (the full distribution of offers) may be obscured by the observed wages that are accepted.</p>
<ul>
<li><strong>Eckstein and Wolpin (1999)</strong> <em><a href="https://faculty.idc.ac.il/Eckstein/pdf/Wolpin-Eckstein.pdf" rel="noreferrer">Estimating The Effect Of Racial Discrimination On First Job Wage Offers</a></em></li>
</ul>
<p>This paper looks particularly at race, rather than gender, but can be further applied to gender in newer studies. Discrimination in terms of wages <em>offered</em> tend to result in smaller observed discrimination if you only look at wages <em>accepted</em>. In this study, the differences between ethnic groups was three times greater for wages offered than for wages accepted.</p>
<hr />
<p><strong>Closing Comments</strong></p>
<hr />
<p>The gender discrimination literature has many facets, with a lot of plausible evidence for its existence, from all sorts of angles. Many related papers on gender discrimination can be found if you look through the citations of the papers I have listed above. The statistics that politicians may cite are not the same as what economists will actually tell you, so take whatever activist, blog, editorial/opinion column, or social media personality says with a grain of salt.</p>
<p><strong>I will not provide a hard number for how much of the gender pay gap is attributable to discrimination because doing so accurately is almost impossible.</strong> Anyone who tells you a hard number may indeed be (inadvertently) lying to you, but this is a very difficult topic to approach, so some grace is needed when we discuss gender discrimination.</p>
<p>Comments on papers to add, or criticisms of papers listed are welcome.</p>

CC BY-SA 4.0
2021-03-16T18:23:28.777Z
Writing this answer must have taken a lot of time, and you deserve appreciation, but it's very hard to digest for me. For example, I have no idea what this paragraph means: "What can be attributed to [...]". Better educated women seem to be better equipped to deal with discrimination, and they tend to choose to work in sectors where education is highly valued, BUT they are paid less? How is it possible? It seems contradictory and I don't know what to make of this and some other paragraphs
Sergey Zolotarev
CC BY-SA 4.0
2021-03-16T18:42:53.187Z
A woman can work in an industry that pays higher than average, but still be paid less than a man in that industry. It's not a blanket statement saying "oh, woman want to work in better industries, but get paid less *in general*". So there is some care that needs to be put into reading what is written. If my explanations seem awkward, it is always best to try and read the main paper (although I have tried to make my writing more accessible than the main papers, since they can be pretty technical.) Hope this explanation helps.
Kitsune Cavalry
CC BY-SA 4.0
2021-04-07T19:31:25.540Z
Great work! Basically a literature review this answer
Papayapap
CC BY-SA 4.0
2022-01-21T15:22:53.507Z
"An open question that these papers don't answer is why exactly women may end up being more inelastic than men, more unwilling to quit jobs that may underpay them" - I would bet a lot, that if someone did proper research, they would find that the same outcome applies to masculine-presenting lesbians, maybe to lesser degree. If so, it would provide proof of an obvious explanation - men are less inelastic than women because they **have to be** - women care more about money in their partner choice. So men (+ lesbians who are more masculine) can't afford to be inelastic for social reasons
DVK
CC BY-SA 4.0
2021-03-15T21:41:38.787Z
2021-03-15T21:51:26.913Z
2021-03-15T21:51:26.913Z
Kitsune Cavalry
<p>The gender pay gap is not statistical significant, as claimed by the mainstream economists.</p>
<p>Check this AER paper by a famous female scholar:</p>
<p><strong>C. Goldin (2014) A Grand Gender Convergence: Its Last Chapter,</strong> AER
<a href="https://pubs.aeaweb.org/doi/pdf/10.1257/aer.104.4.1091" rel="noreferrer">https://pubs.aeaweb.org/doi/pdf/10.1257/aer.104.4.1091</a></p>

CC BY-SA 4.0
2021-03-31T13:47:36.170Z
2021-03-31T13:47:36.170Z
High GPA
<p>There could be several reasons here are just few:</p>
<ol>
<li><p>Principal-agent problems. Firms are typically not managed by their owners but by managers (agents) who act on the behalf of owners/shareholders (principals). While, owners might desire to maximize profits agents can to some degree act to pursue their own goals (see discussion in Hendrikse Economics and Management of Organizations).</p>
<p>For example, CEO might spend more lavishly on things like their private jet, limo, having HQ built by famous architect than profit maximizing CEO would. In the same way CEO/manager with taste for discrimination might pursue that taste even at the expense of profit (to a degree of course).</p>
</li>
<li><p>Consumers could have taste for discrimination. This is in fact classic example coming from one of the earliest work on discrimination. If consumers simply have preference for seeing men instead of women at some work and are willing to pay for satisfying this preference, there will be wage gap between men and women (see Mankiw Principles of Economics pp 395).</p>
<p>Mankiw <a href="https://books.google.com/books?id=KQfFDwAAQBAJ&amp;pg=PA392&amp;lpg=PA392&amp;dq=%22Studies%20of%20sports%20teams%20suggest%20that%20racial%20discrimination%20has%22&amp;source=bl&amp;ots=qGgAUR3jpN&amp;sig=ACfU3U2QzUyhW2wBheI01zYoxDUUT_lOOw&amp;hl=en&amp;sa=X&amp;ved=2ahUKEwjB2-Hzta7vAhUeGDQIHT8qAHUQ6AEwA3oECA4QAw#v=onepage&amp;q=%22Studies%20of%20sports%20teams%20suggest%20that%20racial%20discrimination%20has%22&amp;f=false" rel="noreferrer">has a good example</a> of this for the race wage gap, but the logic of the example directly extends to gender wage gap:</p>
<blockquote>
<p>Studies of sports teams suggest that racial discrimination has, in fact, been common and that much of the blame lies with customers. One study, published in the
Journal of Labor Economics in 1988, examined the salaries of basketball players and
found that black players earned 20 percent less than white players of comparable
ability. The study also found that attendance at basketball games was larger for
teams with a greater proportion of white players. One interpretation of these facts
is that, at least at the time of the study, customer discrimination made black players
less profitable than white players for team owners. In the presence of such customer discrimination, a discriminatory wage gap can persist, even if team owners
care only about profit.</p>
</blockquote>
</li>
<li><p>It could be result of government intervention (See discussion in Mankiw Principles of Economics pp 395).</p>
<p>For example, many governments around the world mandate that firms have to provide women with job guarantee during late pregnancy/mothers leave. Perks like these are costly and in competitive markets firms will just pass costs of these perks directly on their female employees (in form of lower wage - although this would not affect <em>total</em> compensation it is part of explanation for <em>wage</em> differentials).</p>
</li>
<li><p>Most labor markets are not perfect. In imperfect labor markets there are often quasi-rents to have that can be split between employee and employer. If for example women tend to be less assertive during negotiation (e.g. see <a href="https://psycnet.apa.org/buy/2010-00584-007" rel="noreferrer">Amanatullah &amp; Morris, 2010)</a>, they might end up with less quasi-rents than their male counterparts (this argument is covered in greater detail in the Papayapap's answer).</p>
</li>
</ol>
<p>The list above is not exclusive, but those are one of the major reasons you will commonly find in economics textbooks.</p>
<p>To sum it up, the argument you make in the question is valid argument but it  is only <em>guaranteed</em> to work under host of additional supporting assumptions. For example, assumption that customers do not care about gender might be true in some profession but not in others (e.g. perhaps male anchor appears more trustworthy to audience?).</p>
<p>Although careful studies that control for all relevant characteristics show that gender wage gap is much smaller than laymen commonly perceive it to be, based on senseless comparison of aggregates between male and female pay, many studies show that there still is <em>some</em> gender pay gap that cannot be accounted for by objective factors. See discussion of these results in this nice explainer from <a href="https://www.economist.com/graphic-detail/2017/08/01/are-women-paid-less-than-men-for-the-same-work" rel="noreferrer">The Economist</a>. For example, in 2016 the gender pay gap in the UK was estimated to be only <span class="math-container">$0.8\%$</span>, in France<span class="math-container">$2.7\%$</span> and Germany <span class="math-container">$3\%$</span>, once objective factors were accounted for. That is admittedly small, but should not be trivialized nonetheless.</p>

CC BY-SA 4.0
2021-03-12T21:57:35.633Z
+1  Your last paragraph "Although careful studies ...." makes an important point which could well have been given more prominence.
Adam Bailey
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2021-03-13T01:04:38.937Z
+1 On consumer based discrimination, I think a more commonly used example these days is that of a female car mechanic, which tends to be trusted less (for given skill) by customers unfortunately. Just wanted to park that example in case it helps anyone.
BB King
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2021-03-13T07:30:00.580Z
I think you need to specify "irrational wage gap". There are wage gaps due to age and experience, which aren't considered problematic because they are rational. If customers prefers employees of a certain kind, it is not irrational to pay that kind of employees more.
d-b
CC BY-SA 4.0
2021-03-13T07:40:24.277Z
I'd also add that many women shift focus in their 30s to their family life. They may switch to working part time or take several years off and fall behind on their career path. There are few women CEOs because those kinds of jobs are extremely competitive,  requiring lots of working experience and long working hours,  and many women just don't think it's worth it. If annual income is used as a measure,  part time workers will skew the data.
eipi
CC BY-SA 4.0
2021-03-13T09:07:06.817Z
On point 3, are you referring specifically to governments with sexist laws, giving mothers more parental leave than fathers?  AFAIK Switzerland had such a law until fairly recently.
gerrit
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2021-03-13T09:34:22.940Z
Good answer until your last paragraph. Controlling for the causes of the pay gap doesn't give you better data, it just ignores the causes.
Jack Aidley
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2021-03-13T09:38:57.297Z
@gerrit yes, if the laws are equal then this would not create an issue. There could still be an issue if culturally women are always the ones going on the mothers leave but then government would not be the cause
1muflon1
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2021-03-13T09:44:01.020Z
@JackAidley no you have to compare apples with apples not apples with oranges. In economics when we talk about gender pay gap it is gap **caused** solely by having different gender. If there is a male IT professional with 2 PhDs earning 5000e per month and female factory worker without finished high school earning 500e per month the difference between those two people is not *gender* wage gap, but difference in human capital and so on. If you are actually interested in *gender* wage gap you need to control for skill, experience, education, hours, profession etc - that is elementary statistics
1muflon1
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2021-03-13T10:31:14.510Z
@1muflon1 If you control for experience and hours you ignore women's loss of experience and hours through childcare, if you control for different pay in different professions you ignore the causal role of gender bias in these pay differentials. If you're actually interested in the pay gap you need to consider the impact across the whole gamut of issues not crudely control for issues that are actually causal. This is elementary in avoiding the misapplication of statistics.
Jack Aidley
CC BY-SA 4.0
2021-03-13T10:43:48.830Z
@JackAidley you are clearly not an economist so let me explain this in layman terms. Gender wage gap in econ. lit. is wage gap that cannot be explained by other factors, also the child care is one of the factors that is being controlled for. Of course, that does not mean that there is no sexism in society for example patriarchal culture that lets say steers women away from high paying stem jobs to humanities and so on. However, while these are important issues they are not indicative of gender discrimination in *pay*. For example, if women have less PhD due to sexist culture that is a problem
1muflon1
CC BY-SA 4.0
2021-03-13T10:48:06.607Z
and certainly unjust, but the resulting wage differential is due differences in human capital even if the opportunities to accumulate human capital were not equal. Again this does not mean that it is not important, or that we should not do something about it, it is just different issue. Economics.SE is a science stack not opinion forum hence the terminology and jargon used is that of field of economics.
1muflon1
CC BY-SA 4.0
2021-03-13T21:50:36.423Z
@JackAidley `Controlling for the causes of the pay gap doesn't give you better data, it just ignores the causes.` Nonsense -- you don't have a firm grasp of statistics, either.  If you don't control for other correlated and confounding factors you cannot isolate the variable of interest.  Completely basic stuff when performing a statistical analysis.  Your approach would have you claiming that increased sweater sales causes colds and a load of equally silly things.
eps
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2021-03-13T21:53:42.070Z
Completely absent from the discussion of 'patriarchal society' 'steering' anything is the question of whether male humans and female humans want or tend toward the same careers or life options in general. Biology alone tells us that men and women won't want the same things, so it is a false basis and assumption to begin with - 'if there is disparity between men and women, it is because of malice on the part of the sex that benefits more (necessarily) than the other sex.' But I realize that science is divided up into The Science™ and actual empirical scientific facts.
SolaGratia
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2021-03-13T22:05:27.007Z
In other words, if the correlation between A and B disappears after you introduce C, A and B are not causatively linked.
eps
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2021-03-13T23:28:21.630Z
@SolaGratia, I don't think the allegation of "malice" arises simply from the existence of the differentials in the first place - which can be attributed to impersonal systemic factors - but from the resistance to systemic change which would redress the differentials that have emerged. Although men and women may want different things, there's little evidence that one wants their employment to be systematically lower paid than the other, so I see no mileage in that point.
Steve
CC BY-SA 4.0
2021-03-13T23:49:43.250Z
@Steve there’s a great deal of evidence, however, that women are more likely to value things over money when choosing a job. That’s not “wanting to be lower paid”, it’s wanting a more fitting culture, or flexible work hours. Example: https://insights.stackoverflow.com/survey/2018#work-_-differences-in-assessing-jobs-by-gender.
Tim
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2021-03-14T00:11:30.267Z
@Tim, what's a "more fitting culture" anyway? And "flexible" work hours are probably just hours which integrate with the demands of childcare. There is no necessary reason why these should be incompatible with equal pay, particularly as men can also perform childcare. You cast the situation as women choosing to forfeit pay in exchange for flexibility, tacitly holding that they can't have both. I'd also suggest an alternative possibility, which is that a pay forfeit is not chosen individually, but simply imposed collectively.
Steve
CC BY-SA 4.0
2021-03-14T00:19:29.077Z
@Steve I have no idea what a more fitting culture is. That’s up to them? Let me put it this way. I chose to work for a company in a certain city. I chose a company that’s relatively small. I chose a company with flexible hours. I chose a company within a 20 minute commute. Those are my choices. I value those over more money. Suggesting that the reasons women are paid less is out of their control implies they have no agency. And you seem to suggest that women *can* have everything? That’s nonsense. Everything in life is a series of trade offs, be it work, housing, relationships, whatever.
Tim
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2021-03-14T00:35:45.007Z
@Tim, I neither said that "women had no agency" nor that "women can have everything". I firstly contended that one thing women certainly cannot seem to choose is *both* equal pay *and* working hours consistent with childcare, and you react with incredulity that such a thing is even possible. There are a variety of ways in which it is possible, but a main one I would suggest is that *all* jobs (whether occupied by men or women) are made consistent by default with childcare responsibilities, in the same way we organise all jobs to be consistent with necessary eating and sleeping.
Steve
CC BY-SA 4.0
2021-03-14T00:37:41.287Z
@Steve "there's little evidence that one wants their employment to be systematically lower paid than the other" The amount of evidence that women are paid less than men *because they aren't* men is less than little - it's *zero*. It's also illegal to pay women less, which means women don't have to put up with less pay in any way. Men aren't women, and men and women aren't the same. They are equally human, and thus have equal dignity. But that's where the similarities stop, and differences begin. Beyond this is scienceand biology (and since 5 minutes ago in human history, 'hate speech').
SolaGratia
CC BY-SA 4.0
2021-03-14T00:42:28.877Z
@Steve sleeping and eating are necessary: having children is a choice. Working hours consistent with childcare have a cost (the employee not always being available etc). Why should the company take that burden? And why should people who *chose* to have children have special provisions made for them? I wouldn’t expect all companies to fit in with my choice to (say) want to travel Europe, or go out parting every night and start work late, or work remotely without an internet connection. All of those are choices. I don’t see why having children is some special case!
Tim
CC BY-SA 4.0
2021-03-14T00:44:33.730Z
@Steve try ignoring gender from the mix. Why should I, a man with no children, be treated differently from a man with children? Sure: you could give me “hours that work with childcare” too, but that has no value to me. I would prefer more money over that. I’m sure if and when I chose to have children, my priorities would change, but that’s part of the choice. That choice has upsides (I gather having children is rewarding, maybe someone to look after me when I’m old) and downsides (loss of freedom, high cost, space in my home, responsibility for another human)
Tim
CC BY-SA 4.0
2021-03-14T00:46:43.953Z
@SolaGratia, I don't contend men and women are the same. But it's false to say it's illegal to pay women less than men - it's actually perfectly lawful to do so, provided they are distributed into different occupations, different grades, or even just distributed across different employers, because the law says that differences across these boundaries are not within the scope of protections in place.
Steve
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2021-03-14T00:50:45.143Z
@Steve that’s not paying *women* less, that’s paying less for different jobs...
Tim
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2021-03-14T00:55:42.373Z
@Tim, having children is no less necessary for our society as a whole than eating or sleeping is. I concede it isn't necessary for every individual to be engaged in it, and it can be suspended for longer than eating and sleeping, but no less necessary overall. As for why the company should take the burden, for exactly the same reasons as it must take the burden of sleeping and eating - they are *necessary* functions that must be accomodated.
Steve
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2021-03-14T01:01:34.227Z
@Steve I mean we can argue about the societal necessity (and if there is a societal necessity, society should bear the cost via government I think, not employers), but it is very definitely almost always an individual choice to have a child. I don’t think my employer should bear the burden for my individual choices. I should. Otherwise a) where do you draw the line and b) how do you make it fair for people who make different choices?
Tim
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2021-03-14T01:04:15.360Z
Comments are not for extended discussion; this conversation has been [moved to chat](https://chat.stackexchange.com/rooms/120838/discussion-on-answer-by-1muflon1-if-women-are-paid-less-for-the-same-work-why-d).
1muflon1
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2021-03-17T19:11:57.197Z
Your definition of gender wage gap is a bit peculiar. The OECD indicator for gender wage gap, for example, is simply "defined as the difference between median earnings of men and women relative to median earnings of men." Controlling for characteristics that covary with gender is certainly the right approach if you are looking for the effect of direct discrimination, but it is also akin to defining the gender wage gap away. See https://data.oecd.org/earnwage/gender-wage-gap.htm
henning no longer feeds AI
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2021-03-17T19:20:19.817Z
@henning--reinstateMonica as per comments above I am using definition commonly applied across empirical literature. In econ literature gender pay gap means one that cannot be explained when you look at *apples for apples* comparisons. What OECD calls gender pay gap would in literature be called ‘unadjusted pay gap’ - always with that clarifier in similar way as economists will by default often refer to real variables and apply qualifier nominal to non-real variables
1muflon1
CC BY-SA 4.0
2021-03-17T19:23:23.957Z
@1muflon1 yes indeed, I just came back to add that what you're discussing is the adjusted gender wage gap, which in some ways is practically less relevant. Anyway, I think this distinction is crucial and should be made prominent in your answer. Not making the distinction leads to useless discussing at cross-purposes (see many comments above, IMO).
henning no longer feeds AI
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2021-03-17T19:26:35.887Z
@henning--reinstateMonica but the unadjusted gender pay gap is economically and practically irrelevant - it has the same informative value as comparing prices across different countries *without using exchange rate*it’s like comparing prices of apples in Swiss franks and Rubles, and not really used in economics literature, this is science stack so I prefer using established terminology regardless of terminology used by laymen.
1muflon1
CC BY-SA 4.0
2021-03-17T19:55:28.920Z
@1muflon1 I understand and respect your point of view, but I don't share it. First, as can be seen in some other answers, there is a lot of confusion, as readers (including laypersons) conflate the adjusted and unadjusted gender wage gap. Second, it is practically highly relevant that characteristics affecting wages such as full or part-time employment, labour market experience, childcare obligations, education etc. covary with gender. It seems I might have to contribute my own answer. :)
henning no longer feeds AI
CC BY-SA 4.0
2021-03-17T20:15:20.517Z
@henning--reinstateMonica the problem is that unadjusted gender pay gap carries no useful information about these. It does not tell you if women work more part time, it does not tell you if women put more time into child care, it does not tell you if women have less education it is some sum of all these effects it is completely possible women work more have more education and it’s all caused by positive discrimination in immigration that lets more immigrant women (there is usually wage penalty for immigrants) etc. You can contribute your answer but your answer should not be based on your
1muflon1
CC BY-SA 4.0
2021-03-17T20:16:33.610Z
@henning--reinstateMonica on your opinion or your views but based on facts/scientific studies etc. if you think you can find support for that view (on usefulness of unadjusted gap) in actual literature then go ahead (although I would be very surprised if that would be possible). Also note I do believe that there is discrimination happening but this is science stacks so we expect answers rooted in science not opinions/views see the help center. Also make sure your answer actually addresses the question which is not about gender pay gap per se
1muflon1
CC BY-SA 4.0
2021-03-17T21:14:56.283Z
@1muflon1 sure, I agree. Unfortunately there are quite a few opinion-based answers already.
henning no longer feeds AI
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2021-03-17T21:19:09.817Z
@henning--reinstateMonica you are right and many of those users were contacted by mod team and got flags and now we have whole discussion on  deleting such posts on the spot and the other opinion based answers might still be deleted one already was see this new meta about that https://economics.meta.stackexchange.com/questions/2099/post-removal-and-rules-reminder. If you want to chance it go ahead but you will be just stirring more trouble and more work and headache for us mods. If you are interested in providing science based answer go ahead maybe you can manage to make good argument
1muflon1
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2021-03-18T06:56:58.390Z
@1muflon1 I'm only interested in providing an answer backed up with references and based on sound reasoning. So it will take some time to do this (I'm busy with two papers right now), if I do it. Kudos for a strict policy on opinion-based answers. Politics.se is pretty unusable for lack of one, IMO.
henning no longer feeds AI
CC BY-SA 4.0
2021-03-19T18:02:41.520Z
1. Just because some factors have been controlled for doesn't mean all factors have been controlled for. 2. “Controlling” for a variable is simply a statistical term for making adjustments that are our best guess for how to compensate for it. It doesn't magically tell us what would remain if we removed that variable would be. Statistics doesn't work that way.
Acccumulation
CC BY-SA 4.0
2021-03-19T18:02:44.507Z
“but the unadjusted gender pay gap is economically and practically irrelevant” If women are acquiring less human capital, that absolutely is relevant in general (although not to this question). Comparing it to not taking into exchange rate is absurd.
Acccumulation
CC BY-SA 4.0
2021-03-19T18:02:55.387Z
@d-b  “There are wage gaps due to age and experience, which aren't considered problematic because they are rational. If customers prefers employees of a certain kind, it is not irrational to pay that kind of employees more.” That doesn't mean it isn't problematic.
Acccumulation
CC BY-SA 4.0
2021-03-19T18:03:11.747Z
@eps “In other words, if the correlation between A and B disappears after you introduce C, A and B are not causatively linked.” That's not how causation works. If the difference between black wages and white wages in 1870  disappears when you control for whether someone is a former slave, that doesn't mean that race and income aren't causally linked.
Acccumulation
CC BY-SA 4.0
2021-03-19T18:03:19.690Z
@Steve “And "flexible" work hours are probably just hours which integrate with the demands of childcare.” “Flexible” doesn't refer to *when* the hours are, but how they are determined. If the employee can decide when the hours are, then they are flexible.
Acccumulation
CC BY-SA 4.0
2021-03-19T18:03:35.787Z
@JackAidley “Controlling for the causes of the pay gap doesn't give you better data, it just ignores the causes.” This question asks specifically about discrimination on employer level. While the causes of women having less value to employers is a valid issue in general, they are beyond the scope of this question.
Acccumulation
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2021-03-19T18:34:37.110Z
@Acccumulation comments are not for extended discussion. Please use [chat](https://chat.stackexchange.com/rooms/120838/discussion-on-answer-by-1muflon1-if-women-are-paid-less-for-the-same-work-why-d)
1muflon1
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2021-03-19T20:44:50.367Z
@Acccumulation Yes, it does.
d-b
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2021-03-12T20:19:43.273Z
2021-03-13T23:36:22.110Z
2021-03-13T23:36:22.110Z
1muflon1
<p>If women are paid less for the same work, why don't employers hire just women? Do employers decide to lose profits just out of sexism, in feminists' and researchers' opinion? It doesn't make sense to me. In the free and competitive market, if people earn less, it means they generate, or are expected to generate, less added value (for example, because they are less educated). Am I wrong?</p>

CC BY-SA 4.0
2021-03-12T18:12:32.323Z
Welcome to Economics:SE. Thank you for your question; please consider revising it to be more in line with our community expectations. Like many other stacks, [we expect questions to provide evidence of prior research](https://economics.stackexchange.com/help/how-to-ask). That helps us to understand the question, and avoids our repeating work you've already done. Our [help center](https://economics.stackexchange.com/help), and [other stacks](https://interpersonal.meta.stackexchange.com/questions/3224/how-do-i-write-a-good-question) provide additional resources to assist with revisions.
1muflon1
CC BY-SA 4.0
2021-03-13T00:53:40.993Z
https://www.aeaweb.org/articles?id=10.1257/jel.20160995
Alan
CC BY-SA 4.0
2021-03-13T07:30:27.113Z
I think you need to specify "irrational wage gap". There are wage gaps due to age and experience, which aren't considered problematic, because they are rational. If customers prefers employees of a certain kind, it is not irrational to pay that kind of employees more.
d-b
CC BY-SA 4.0
2021-03-13T10:36:49.503Z
[For surprising reasons, not related to economics per se](https://blog.jaibot.com/the-copenhagen-interpretation-of-ethics/).
Jared Smith
CC BY-SA 4.0
2021-03-13T11:24:46.287Z
Also, do we know that unemployment rates of women (note unemployment means only those who are actively looking) are not lower than men? What is the evidence on this? Seems to be a crucial assumption in this question..
Papayapap
CC BY-SA 4.0
2021-03-13T18:23:19.150Z
@DJClayworth That is exactly the answer DonQuiKong gave.
Papayapap
CC BY-SA 4.0
2021-03-13T19:12:18.303Z
In this modern era, the skill set and the soft skills decide the package of an employee and that is not biased based on gender. Information technology is the sector to name a few, where people, who possess the same skillset are provided with the same pay-scale band, if someone is getting a low wage then that means either they are doing redundant/ useless work, let it be a woman or man. you can go and check the websites like `payscale` where you can't find the payscale based on the gender basis which means it's all same of all
Prasanth Rajendran
CC BY-SA 4.0
2021-03-13T19:37:26.007Z
Because "women are paid less" has always generally been a myth from manipulated statistics. The primary contributor to this is new mothers working part time or being on maternity leave (it's more accurately referred to as "the motherhood penalty"). Therefore hiring more women wouldn't save the company money, it would require more employees to fill in gaps if the employees were building families. :)
Jason C
CC BY-SA 4.0
2021-03-13T20:29:15.057Z
@eshansingh1 Why? I see many people criticizing the measurement of the wage gap, but is this inherently sexist? Or did you refer to other comments?
Papayapap
CC BY-SA 4.0
2021-03-13T22:35:37.200Z
My male nurse friend told me that wage gap happens in the field because there are simply too few male nurse and they don't have to be out for a year per child for maternity leave. So hospitals fight to bring male nurse to their own hospital. And salary offer increases as a result. So this is not a simple matter to explain. Wage gap doesn't always happen due to discrimination.
jamryu
CC BY-SA 4.0
2021-03-13T23:07:37.410Z
@therealManUtdFan arguably, your particular example is straightforward textbook discrimination and would be illegal (though perhaps very hard to prove and enforce) in many countries. Discrimination law in e.g. EU explicitly defines "indirect discrimination" as discrimination based on factors that are not necessarily the "prohibited factor" but directly related to it, and explicitly prohibits such discrimination in employment; the likelihood of future maternity leave is one such factor, which obviously matters for practical reasons but is "taboo" to take into account as it's discriminatory.
Peteris
CC BY-SA 4.0
2021-03-14T05:49:16.553Z
I have wondered if the wage gap/parity is the same (or close) for businesses owned or led by women, as it is for businesses owned or led by men.  It is a question distinct from yours, though.
donjuedo
CC BY-SA 4.0
2021-03-14T14:34:41.267Z
In the past, a family with two children meant that the woman had basically a few years less experience than a man of the same profession.  Hire a male professional with 5 years experience vs a female professional with 2 years experience she will not make as much money.  In the Netherlands they force men to take off for maternity (a year I think?) as well as women to address this gap.
Mikey
CC BY-SA 4.0
2021-03-14T21:38:33.870Z
@JaredSmith The "Copenhagen interpretation of ethics" doesn't in any way prevent people from arbitraging away such a difference, supposing it were real (i.e. not attributable to other factors). It simple prevents *talking about it* in the way that Evan Thornley did. This is, of course, putting aside the part where deliberately creating such a gap would generally be *against the law*, at least in developed industrial nations. But if a Thornley type were barred from doing this by law, then either there is another law breaker already, or there is not an actual issue.
Karl Knechtel
CC BY-SA 4.0
2021-03-14T22:49:57.447Z
This question is bait-and-switch and needs work.  The gender pay gap is defined as the overall pay women receive vs men, not the pay in a specific role.  It encompasses the tendency to promote men over women, and hire men over women with the same qualifications.  Reducing it to "pay in the same job/role" is missing the point and inviting a lot of poor answers that don't deal with it being a bad question in the first place.

Refer https://www.epi.org/publication/what-is-the-gender-pay-gap-and-is-it-real, https://www.wgea.gov.au/the-gender-pay-gap etc. for definitions.  Suggest mods look at Q.
throx
CC BY-SA 4.0
2021-03-14T23:30:19.000Z
@DJClayworth What you're missing is that so long as it's not the majority of employers who feel women should get less that it won't matter--if discrimination drives wages down they're a better deal and other employers will snap them up.
Loren Pechtel
CC BY-SA 4.0
2021-03-15T07:18:01.803Z
@user39728 Poorly worded and ambiguous questions, particularly on "uncomfortable topics" promote ignorance rather than enlightenment.  This has been borne out on social media for the last decade or so, as fact-free conspiracies fly all over the place and birth movements like QAnon.  OP needs to define "wage gap" better, and clarify that their use of it does not meet the generally accepted definition, or the question as posed does more to disinform than inform, and create controversy where there should be none.
throx
CC BY-SA 4.0
2021-03-15T08:23:04.537Z
Some of these comments are answers in disguise. Write answers as answers, not comments.
Stig Hemmer
CC BY-SA 4.0
2021-03-15T15:12:45.680Z
Comments are not for extended discussion; this conversation has been [moved to chat](https://chat.stackexchange.com/rooms/120878/discussion-on-question-by-sergey-zolotarev-if-women-are-paid-less-for-the-same-w).
1muflon1
<inequality><nonexpert><gender-pay-gap>
If women are paid less for the same work, why don't employers hire just women?
Sergey Zolotarev
# If women are paid less for the same work, why don't employers hire just women?

(Asked by: username_0 on 2021-03-12)

If women are paid less for the same work, why don't employers hire just women? Do employers decide to lose profits just out of sexism, in feminists' and researchers' opinion? It doesn't make sense to me. In the free and competitive market, if people earn less, it means they generate, or are expected to generate, less added value (for example, because they are less educated). Am I wrong?

**Tags:** inequality, nonexpert, gender-pay-gap
> **Comments:**
> **username_1**: Welcome to Economics:SE. Thank you for your question; please consider revising it to be more in line with our community expectations. Like many other stacks, [we expect questions to provide evidence of prior research](https://economics.stackexchange.com/help/how-to-ask). That helps us to understand the question, and avoids our repeating work you've already done. Our [help center](https://economics.stackexchange.com/help), and [other stacks](https://interpersonal.meta.stackexchange.com/questions/3224/how-do-i-write-a-good-question) provide additional resources to assist with revisions.  
> **username_2**: https://www.aeaweb.org/articles?id=10.1257/jel.20160995  
> **username_3**: I think you need to specify "irrational wage gap". There are wage gaps due to age and experience, which aren't considered problematic, because they are rational. If customers prefers employees of a certain kind, it is not irrational to pay that kind of employees more.  
> **username_4**: [For surprising reasons, not related to economics per se](https://blog.jaibot.com/the-copenhagen-interpretation-of-ethics/).  
> **username_5**: Also, do we know that unemployment rates of women (note unemployment means only those who are actively looking) are not lower than men? What is the evidence on this? Seems to be a crucial assumption in this question..  
> **username_5**: @DJClayworth That is exactly the answer DonQuiKong gave.  
> **username_6**: In this modern era, the skill set and the soft skills decide the package of an employee and that is not biased based on gender. Information technology is the sector to name a few, where people, who possess the same skillset are provided with the same pay-scale band, if someone is getting a low wage then that means either they are doing redundant/ useless work, let it be a woman or man. you can go and check the websites like `payscale` where you can't find the payscale based on the gender basis which means it's all same of all  
> **username_7**: Because "women are paid less" has always generally been a myth from manipulated statistics. The primary contributor to this is new mothers working part time or being on maternity leave (it's more accurately referred to as "the motherhood penalty"). Therefore hiring more women wouldn't save the company money, it would require more employees to fill in gaps if the employees were building families. :)  
> **username_5**: @eshansingh1 Why? I see many people criticizing the measurement of the wage gap, but is this inherently sexist? Or did you refer to other comments?  
> **username_8**: My male nurse friend told me that wage gap happens in the field because there are simply too few male nurse and they don't have to be out for a year per child for maternity leave. So hospitals fight to bring male nurse to their own hospital. And salary offer increases as a result. So this is not a simple matter to explain. Wage gap doesn't always happen due to discrimination.  
> **username_9**: @therealManUtdFan arguably, your particular example is straightforward textbook discrimination and would be illegal (though perhaps very hard to prove and enforce) in many countries. Discrimination law in e.g. EU explicitly defines "indirect discrimination" as discrimination based on factors that are not necessarily the "prohibited factor" but directly related to it, and explicitly prohibits such discrimination in employment; the likelihood of future maternity leave is one such factor, which obviously matters for practical reasons but is "taboo" to take into account as it's discriminatory.  
> **username_10**: I have wondered if the wage gap/parity is the same (or close) for businesses owned or led by women, as it is for businesses owned or led by men.  It is a question distinct from yours, though.  
> **username_11**: In the past, a family with two children meant that the woman had basically a few years less experience than a man of the same profession.  Hire a male professional with 5 years experience vs a female professional with 2 years experience she will not make as much money.  In the Netherlands they force men to take off for maternity (a year I think?) as well as women to address this gap.  
> **username_12**: @JaredSmith The "Copenhagen interpretation of ethics" doesn't in any way prevent people from arbitraging away such a difference, supposing it were real (i.e. not attributable to other factors). It simple prevents *talking about it* in the way that Evan Thornley did. This is, of course, putting aside the part where deliberately creating such a gap would generally be *against the law*, at least in developed industrial nations. But if a Thornley type were barred from doing this by law, then either there is another law breaker already, or there is not an actual issue.  
> **username_13**: This question is bait-and-switch and needs work.  The gender pay gap is defined as the overall pay women receive vs men, not the pay in a specific role.  It encompasses the tendency to promote men over women, and hire men over women with the same qualifications.  Reducing it to "pay in the same job/role" is missing the point and inviting a lot of poor answers that don't deal with it being a bad question in the first place.  Refer https://www.epi.org/publication/what-is-the-gender-pay-gap-and-is-it-real, https://www.wgea.gov.au/the-gender-pay-gap etc. for definitions.  Suggest mods look at Q.  
> **username_14**: @DJClayworth What you're missing is that so long as it's not the majority of employers who feel women should get less that it won't matter--if discrimination drives wages down they're a better deal and other employers will snap them up.  
> **username_13**: @user39728 Poorly worded and ambiguous questions, particularly on "uncomfortable topics" promote ignorance rather than enlightenment.  This has been borne out on social media for the last decade or so, as fact-free conspiracies fly all over the place and birth movements like QAnon.  OP needs to define "wage gap" better, and clarify that their use of it does not meet the generally accepted definition, or the question as posed does more to disinform than inform, and create controversy where there should be none.  
> **username_15**: Some of these comments are answers in disguise. Write answers as answers, not comments.  
> **username_1**: Comments are not for extended discussion; this conversation has been [moved to chat](https://chat.stackexchange.com/rooms/120878/discussion-on-question-by-sergey-zolotarev-if-women-are-paid-less-for-the-same-w).  

---

## 8 answers

### Answer by username_1 on 2021-03-12. Score: 82 | Accepted answer

There could be several reasons here are just few:

1. Principal-agent problems. Firms are typically not managed by their owners but by managers (agents) who act on the behalf of owners/shareholders (principals). While, owners might desire to maximize profits agents can to some degree act to pursue their own goals (see discussion in Hendrikse Economics and Management of Organizations).

   For example, CEO might spend more lavishly on things like their private jet, limo, having HQ built by famous architect than profit maximizing CEO would. In the same way CEO/manager with taste for discrimination might pursue that taste even at the expense of profit (to a degree of course).
2. Consumers could have taste for discrimination. This is in fact classic example coming from one of the earliest work on discrimination. If consumers simply have preference for seeing men instead of women at some work and are willing to pay for satisfying this preference, there will be wage gap between men and women (see Mankiw Principles of Economics pp 395).

   Mankiw [has a good example](https://books.google.com/books?id=KQfFDwAAQBAJ&pg=PA392&lpg=PA392&dq=%22Studies%20of%20sports%20teams%20suggest%20that%20racial%20discrimination%20has%22&source=bl&ots=qGgAUR3jpN&sig=ACfU3U2QzUyhW2wBheI01zYoxDUUT_lOOw&hl=en&sa=X&ved=2ahUKEwjB2-Hzta7vAhUeGDQIHT8qAHUQ6AEwA3oECA4QAw#v=onepage&q=%22Studies%20of%20sports%20teams%20suggest%20that%20racial%20discrimination%20has%22&f=false) of this for the race wage gap, but the logic of the example directly extends to gender wage gap:

   > Studies of sports teams suggest that racial discrimination has, in fact, been common and that much of the blame lies with customers. One study, published in the
   > Journal of Labor Economics in 1988, examined the salaries of basketball players and
   > found that black players earned 20 percent less than white players of comparable
   > ability. The study also found that attendance at basketball games was larger for
   > teams with a greater proportion of white players. One interpretation of these facts
   > is that, at least at the time of the study, customer discrimination made black players
   > less profitable than white players for team owners. In the presence of such customer discrimination, a discriminatory wage gap can persist, even if team owners
   > care only about profit.
3. It could be result of government intervention (See discussion in Mankiw Principles of Economics pp 395).

   For example, many governments around the world mandate that firms have to provide women with job guarantee during late pregnancy/mothers leave. Perks like these are costly and in competitive markets firms will just pass costs of these perks directly on their female employees (in form of lower wage - although this would not affect *total* compensation it is part of explanation for *wage* differentials).
4. Most labor markets are not perfect. In imperfect labor markets there are often quasi-rents to have that can be split between employee and employer. If for example women tend to be less assertive during negotiation (e.g. see [Amanatullah & Morris, 2010)](https://psycnet.apa.org/buy/2010-00584-007), they might end up with less quasi-rents than their male counterparts (this argument is covered in greater detail in the Papayapap's answer).

The list above is not exclusive, but those are one of the major reasons you will commonly find in economics textbooks.

To sum it up, the argument you make in the question is valid argument but it is only *guaranteed* to work under host of additional supporting assumptions. For example, assumption that customers do not care about gender might be true in some profession but not in others (e.g. perhaps male anchor appears more trustworthy to audience?).

Although careful studies that control for all relevant characteristics show that gender wage gap is much smaller than laymen commonly perceive it to be, based on senseless comparison of aggregates between male and female pay, many studies show that there still is *some* gender pay gap that cannot be accounted for by objective factors. See discussion of these results in this nice explainer from [The Economist](https://www.economist.com/graphic-detail/2017/08/01/are-women-paid-less-than-men-for-the-same-work). For example, in 2016 the gender pay gap in the UK was estimated to be only $0.8\%$, in France$2.7\%$ and Germany $3\%$, once objective factors were accounted for. That is admittedly small, but should not be trivialized nonetheless.

> **Comments:**
> **username_25**: +1  Your last paragraph "Although careful studies ...." makes an important point which could well have been given more prominence.  
> **username_26**: +1 On consumer based discrimination, I think a more commonly used example these days is that of a female car mechanic, which tends to be trusted less (for given skill) by customers unfortunately. Just wanted to park that example in case it helps anyone.  
> **username_3**: I think you need to specify "irrational wage gap". There are wage gaps due to age and experience, which aren't considered problematic because they are rational. If customers prefers employees of a certain kind, it is not irrational to pay that kind of employees more.  
> **username_27**: I'd also add that many women shift focus in their 30s to their family life. They may switch to working part time or take several years off and fall behind on their career path. There are few women CEOs because those kinds of jobs are extremely competitive,  requiring lots of working experience and long working hours,  and many women just don't think it's worth it. If annual income is used as a measure,  part time workers will skew the data.  
> **username_28**: On point 3, are you referring specifically to governments with sexist laws, giving mothers more parental leave than fathers?  AFAIK Switzerland had such a law until fairly recently.  
> **username_29**: Good answer until your last paragraph. Controlling for the causes of the pay gap doesn't give you better data, it just ignores the causes.  
> **username_1**: @gerrit yes, if the laws are equal then this would not create an issue. There could still be an issue if culturally women are always the ones going on the mothers leave but then government would not be the cause  
> **username_1**: @JackAidley no you have to compare apples with apples not apples with oranges. In economics when we talk about gender pay gap it is gap **caused** solely by having different gender. If there is a male IT professional with 2 PhDs earning 5000e per month and female factory worker without finished high school earning 500e per month the difference between those two people is not *gender* wage gap, but difference in human capital and so on. If you are actually interested in *gender* wage gap you need to control for skill, experience, education, hours, profession etc - that is elementary statistics  
> **username_29**: @1muflon1 If you control for experience and hours you ignore women's loss of experience and hours through childcare, if you control for different pay in different professions you ignore the causal role of gender bias in these pay differentials. If you're actually interested in the pay gap you need to consider the impact across the whole gamut of issues not crudely control for issues that are actually causal. This is elementary in avoiding the misapplication of statistics.  
> **username_1**: @JackAidley you are clearly not an economist so let me explain this in layman terms. Gender wage gap in econ. lit. is wage gap that cannot be explained by other factors, also the child care is one of the factors that is being controlled for. Of course, that does not mean that there is no sexism in society for example patriarchal culture that lets say steers women away from high paying stem jobs to humanities and so on. However, while these are important issues they are not indicative of gender discrimination in *pay*. For example, if women have less PhD due to sexist culture that is a problem  
> **username_1**: and certainly unjust, but the resulting wage differential is due differences in human capital even if the opportunities to accumulate human capital were not equal. Again this does not mean that it is not important, or that we should not do something about it, it is just different issue. Economics.SE is a science stack not opinion forum hence the terminology and jargon used is that of field of economics.  
> **username_30**: @JackAidley `Controlling for the causes of the pay gap doesn't give you better data, it just ignores the causes.` Nonsense -- you don't have a firm grasp of statistics, either.  If you don't control for other correlated and confounding factors you cannot isolate the variable of interest.  Completely basic stuff when performing a statistical analysis.  Your approach would have you claiming that increased sweater sales causes colds and a load of equally silly things.  
> **username_31**: Completely absent from the discussion of 'patriarchal society' 'steering' anything is the question of whether male humans and female humans want or tend toward the same careers or life options in general. Biology alone tells us that men and women won't want the same things, so it is a false basis and assumption to begin with - 'if there is disparity between men and women, it is because of malice on the part of the sex that benefits more (necessarily) than the other sex.' But I realize that science is divided up into The Science™ and actual empirical scientific facts.  
> **username_30**: In other words, if the correlation between A and B disappears after you introduce C, A and B are not causatively linked.  
> **username_19**: @SolaGratia, I don't think the allegation of "malice" arises simply from the existence of the differentials in the first place - which can be attributed to impersonal systemic factors - but from the resistance to systemic change which would redress the differentials that have emerged. Although men and women may want different things, there's little evidence that one wants their employment to be systematically lower paid than the other, so I see no mileage in that point.  
> **username_32**: @Steve there’s a great deal of evidence, however, that women are more likely to value things over money when choosing a job. That’s not “wanting to be lower paid”, it’s wanting a more fitting culture, or flexible work hours. Example: https://insights.stackoverflow.com/survey/2018#work-_-differences-in-assessing-jobs-by-gender.  
> **username_19**: @Tim, what's a "more fitting culture" anyway? And "flexible" work hours are probably just hours which integrate with the demands of childcare. There is no necessary reason why these should be incompatible with equal pay, particularly as men can also perform childcare. You cast the situation as women choosing to forfeit pay in exchange for flexibility, tacitly holding that they can't have both. I'd also suggest an alternative possibility, which is that a pay forfeit is not chosen individually, but simply imposed collectively.  
> **username_32**: @Steve I have no idea what a more fitting culture is. That’s up to them? Let me put it this way. I chose to work for a company in a certain city. I chose a company that’s relatively small. I chose a company with flexible hours. I chose a company within a 20 minute commute. Those are my choices. I value those over more money. Suggesting that the reasons women are paid less is out of their control implies they have no agency. And you seem to suggest that women *can* have everything? That’s nonsense. Everything in life is a series of trade offs, be it work, housing, relationships, whatever.  
> **username_19**: @Tim, I neither said that "women had no agency" nor that "women can have everything". I firstly contended that one thing women certainly cannot seem to choose is *both* equal pay *and* working hours consistent with childcare, and you react with incredulity that such a thing is even possible. There are a variety of ways in which it is possible, but a main one I would suggest is that *all* jobs (whether occupied by men or women) are made consistent by default with childcare responsibilities, in the same way we organise all jobs to be consistent with necessary eating and sleeping.  
> **username_31**: @Steve "there's little evidence that one wants their employment to be systematically lower paid than the other" The amount of evidence that women are paid less than men *because they aren't* men is less than little - it's *zero*. It's also illegal to pay women less, which means women don't have to put up with less pay in any way. Men aren't women, and men and women aren't the same. They are equally human, and thus have equal dignity. But that's where the similarities stop, and differences begin. Beyond this is scienceand biology (and since 5 minutes ago in human history, 'hate speech').  
> **username_32**: @Steve sleeping and eating are necessary: having children is a choice. Working hours consistent with childcare have a cost (the employee not always being available etc). Why should the company take that burden? And why should people who *chose* to have children have special provisions made for them? I wouldn’t expect all companies to fit in with my choice to (say) want to travel Europe, or go out parting every night and start work late, or work remotely without an internet connection. All of those are choices. I don’t see why having children is some special case!  
> **username_32**: @Steve try ignoring gender from the mix. Why should I, a man with no children, be treated differently from a man with children? Sure: you could give me “hours that work with childcare” too, but that has no value to me. I would prefer more money over that. I’m sure if and when I chose to have children, my priorities would change, but that’s part of the choice. That choice has upsides (I gather having children is rewarding, maybe someone to look after me when I’m old) and downsides (loss of freedom, high cost, space in my home, responsibility for another human)  
> **username_19**: @SolaGratia, I don't contend men and women are the same. But it's false to say it's illegal to pay women less than men - it's actually perfectly lawful to do so, provided they are distributed into different occupations, different grades, or even just distributed across different employers, because the law says that differences across these boundaries are not within the scope of protections in place.  
> **username_32**: @Steve that’s not paying *women* less, that’s paying less for different jobs...  
> **username_19**: @Tim, having children is no less necessary for our society as a whole than eating or sleeping is. I concede it isn't necessary for every individual to be engaged in it, and it can be suspended for longer than eating and sleeping, but no less necessary overall. As for why the company should take the burden, for exactly the same reasons as it must take the burden of sleeping and eating - they are *necessary* functions that must be accomodated.  
> **username_32**: @Steve I mean we can argue about the societal necessity (and if there is a societal necessity, society should bear the cost via government I think, not employers), but it is very definitely almost always an individual choice to have a child. I don’t think my employer should bear the burden for my individual choices. I should. Otherwise a) where do you draw the line and b) how do you make it fair for people who make different choices?  
> **username_1**: Comments are not for extended discussion; this conversation has been [moved to chat](https://chat.stackexchange.com/rooms/120838/discussion-on-answer-by-1muflon1-if-women-are-paid-less-for-the-same-work-why-d).  
> **username_33**: Your definition of gender wage gap is a bit peculiar. The OECD indicator for gender wage gap, for example, is simply "defined as the difference between median earnings of men and women relative to median earnings of men." Controlling for characteristics that covary with gender is certainly the right approach if you are looking for the effect of direct discrimination, but it is also akin to defining the gender wage gap away. See https://data.oecd.org/earnwage/gender-wage-gap.htm  
> **username_1**: @henning--reinstateMonica as per comments above I am using definition commonly applied across empirical literature. In econ literature gender pay gap means one that cannot be explained when you look at *apples for apples* comparisons. What OECD calls gender pay gap would in literature be called ‘unadjusted pay gap’ - always with that clarifier in similar way as economists will by default often refer to real variables and apply qualifier nominal to non-real variables  
> **username_33**: @1muflon1 yes indeed, I just came back to add that what you're discussing is the adjusted gender wage gap, which in some ways is practically less relevant. Anyway, I think this distinction is crucial and should be made prominent in your answer. Not making the distinction leads to useless discussing at cross-purposes (see many comments above, IMO).  
> **username_1**: @henning--reinstateMonica but the unadjusted gender pay gap is economically and practically irrelevant - it has the same informative value as comparing prices across different countries *without using exchange rate*it’s like comparing prices of apples in Swiss franks and Rubles, and not really used in economics literature, this is science stack so I prefer using established terminology regardless of terminology used by laymen.  
> **username_33**: @1muflon1 I understand and respect your point of view, but I don't share it. First, as can be seen in some other answers, there is a lot of confusion, as readers (including laypersons) conflate the adjusted and unadjusted gender wage gap. Second, it is practically highly relevant that characteristics affecting wages such as full or part-time employment, labour market experience, childcare obligations, education etc. covary with gender. It seems I might have to contribute my own answer. :)  
> **username_1**: @henning--reinstateMonica the problem is that unadjusted gender pay gap carries no useful information about these. It does not tell you if women work more part time, it does not tell you if women put more time into child care, it does not tell you if women have less education it is some sum of all these effects it is completely possible women work more have more education and it’s all caused by positive discrimination in immigration that lets more immigrant women (there is usually wage penalty for immigrants) etc. You can contribute your answer but your answer should not be based on your  
> **username_1**: @henning--reinstateMonica on your opinion or your views but based on facts/scientific studies etc. if you think you can find support for that view (on usefulness of unadjusted gap) in actual literature then go ahead (although I would be very surprised if that would be possible). Also note I do believe that there is discrimination happening but this is science stacks so we expect answers rooted in science not opinions/views see the help center. Also make sure your answer actually addresses the question which is not about gender pay gap per se  
> **username_33**: @1muflon1 sure, I agree. Unfortunately there are quite a few opinion-based answers already.  
> **username_1**: @henning--reinstateMonica you are right and many of those users were contacted by mod team and got flags and now we have whole discussion on  deleting such posts on the spot and the other opinion based answers might still be deleted one already was see this new meta about that https://economics.meta.stackexchange.com/questions/2099/post-removal-and-rules-reminder. If you want to chance it go ahead but you will be just stirring more trouble and more work and headache for us mods. If you are interested in providing science based answer go ahead maybe you can manage to make good argument  
> **username_33**: @1muflon1 I'm only interested in providing an answer backed up with references and based on sound reasoning. So it will take some time to do this (I'm busy with two papers right now), if I do it. Kudos for a strict policy on opinion-based answers. Politics.se is pretty unusable for lack of one, IMO.  
> **username_34**: 1. Just because some factors have been controlled for doesn't mean all factors have been controlled for. 2. “Controlling” for a variable is simply a statistical term for making adjustments that are our best guess for how to compensate for it. It doesn't magically tell us what would remain if we removed that variable would be. Statistics doesn't work that way.  
> **username_34**: “but the unadjusted gender pay gap is economically and practically irrelevant” If women are acquiring less human capital, that absolutely is relevant in general (although not to this question). Comparing it to not taking into exchange rate is absurd.  
> **username_34**: @d-b  “There are wage gaps due to age and experience, which aren't considered problematic because they are rational. If customers prefers employees of a certain kind, it is not irrational to pay that kind of employees more.” That doesn't mean it isn't problematic.  
> **username_34**: @eps “In other words, if the correlation between A and B disappears after you introduce C, A and B are not causatively linked.” That's not how causation works. If the difference between black wages and white wages in 1870  disappears when you control for whether someone is a former slave, that doesn't mean that race and income aren't causally linked.  
> **username_34**: @Steve “And "flexible" work hours are probably just hours which integrate with the demands of childcare.” “Flexible” doesn't refer to *when* the hours are, but how they are determined. If the employee can decide when the hours are, then they are flexible.  
> **username_34**: @JackAidley “Controlling for the causes of the pay gap doesn't give you better data, it just ignores the causes.” This question asks specifically about discrimination on employer level. While the causes of women having less value to employers is a valid issue in general, they are beyond the scope of this question.  
> **username_1**: @Acccumulation comments are not for extended discussion. Please use [chat](https://chat.stackexchange.com/rooms/120838/discussion-on-answer-by-1muflon1-if-women-are-paid-less-for-the-same-work-why-d)  
> **username_3**: @Acccumulation Yes, it does.  

---

### Answer by username_16 on 2021-03-13. Score: 36

Quite simple. If women are paid less, then that's because people believe their work to be worth less. The same believe, that womens work is worth less, then stops employers from hiring more women.

(Please note that I don't endorse this view. It is, however, the most simple explanation inside of the assumptions made by the question. Also, as a plus, this would mean that employers hiring more women have an inherent advantage.)

> **Comments:**
> **username_1**: Comments are not for extended discussion; this conversation has been [moved to chat](https://chat.stackexchange.com/rooms/120877/discussion-on-answer-by-donquikong-if-women-are-paid-less-for-the-same-work-why).  

---

### Answer by username_17 on 2021-03-13. Score: 30

Because women are not paid less for the same work when all the variables are taken into equasion.

Caveat: below answer is a nearly verbatim copy [of my earlier answer on Politics.SE on the topic](https://politics.stackexchange.com/questions/16093/why-is-the-gender-pay-gap-so-large-in-the-united-states-despite-the-equal-pay-ac/16096#16096)

In short, the much-cited "77 cents" figure is from the "lies, big lies, and statistics" department of political propaganda.

# The real unexplained wage gap is 94%, and it shrinks to nothing in many cases especially if you normalize for child care (e.g. only compare childless women's and not all women's earnings).

> The AAUW has now joined ranks with serious economists who find that when you control for relevant differences between men and women (occupations, college majors, length of time in workplace) the wage gap narrows to the point of vanishing. The 23-cent gap is simply the average difference between the earnings of men and women employed “full time.” What is important is the “adjusted” wage gap-the figure that controls for all the relevant variables. That is what the new AAUW study explores. ([source: Huffington post](http://www.huffingtonpost.com/christina-hoff-sommers/wage-gap_b_2073804.html), citing Association of University Women (AAUW) study "*[Graduating to a Pay Gap](http://www.aauw.org/research/graduating-to-a-pay-gap/)*")
>
> The AAUW researchers looked at male and female college graduates one year after graduation. After controlling for several relevant factors (though some were left out, as we shall see), they found that the wage gap narrowed to only 6.6 cents.

* *So, is it due to discrimination?*

  As per above, of the "23 cents" gap, 17 is 100% definitely **has nothing to do with discrimination at all**.

  The researchers honestly admit that they **don't know how to explain the remaining 6%** (as in, at the moment **they can't attribute it to discrimination**).

  > How much of that is attributable to discrimination? As AAUW spokesperson Lisa Maatz candidly said in an NPR interview, “We are still trying to figure that out.”

  Interestingly, if you look at younger generation, at least in the UK, not only does the pay gap disappear, but it [reverses itself to men's disadvantage](http://www.telegraph.co.uk/women/womens-business/11042829/Women-gender-pay-gap-want-to-close-the-pay-gap-Its-time-to-face-an-uncomfortable-truth.html):

  > The latest report from the Office of National Statistics is even more conclusive: the gender pay gap effectively doesn’t exist between the ages of 18 and 39. Between the ages of 22 and 29, women marginally out earn men.
* So what can *possibly* explain it? Without outright assuming it's discrimination due to your own political biases?

  The same Telegraph article linked in the last paragraph has a possible explanation:

  > However, it's impossible to ignore the fact that men's wages start outstripping women in the years after most people have children.  
  > And if that hasn’t convinced you, research by Essex University and the London School of Economics has indicated that lesbians out earn straight women.  
  > **All the evidence points towards a gender pay gap that is, in part, driven by childcare rather than sexism**. This doesn’t mean that we shouldn’t care about closing the pay gap – but it does make the situation more complex.

  + Another interesting theory I heard proposed (though never saw any research conclusively backing it up) was that one possible factor is [much higher prevalence of males among high-functioning autism diagnoses](https://www.ncbi.nlm.nih.gov/pmc/articles/PMC4164392/). There are [plausible reasons](https://www.psychologytoday.com/blog/my-life-aspergers/201008/affluence-and-autism-cause-and-effect-or-not) to suppose that there might be causative explanations.
  + Additional theory (again with no research support I'm aware of) rests on the fact that men generally are more risk-taking than women.

    If a risk is taken and pays off, that makes the person high-performer and they usually would get paid more.

    If a risk is taken and fails, you usually don't get paid less (although in edge cases you get fired but that's rare unless one was Lehman Brothers level reckless).

    To be successful, a company needs to be agile - which means internal experimentation and risk taking.

# In other words, the short answer is that the reason employers don't hire just women because it would not lead to increased financial performance based on reality. An overwhelming majority of the wage gap has valid rational economic explanations that have nothing to do with biases or sexism.

The only way you can reliably have a wage gap arbitrage is by hiring women with kids - but then you either have to invest more to help them be more productive (e.g. on premises company sponsored child care) - which eats into your arbitrage and likely eliminates it, OR, have employees who by necessity are less productive on average. Being a parent may be a great net benefit to society (after all - those parents are raising people who will be paying for your retirement!), but unfortunately it does objectively bring less value to the company due to less overtime, more time off, distractions etc... Most normal human being evolved to value their children more than company's bottom line.

By the way, I can't find a cite now but I vaguely remember that some companies in USA in the past actually managed to succeed at this exact option (provide extra child care support, and have more productive and successful operations due to attracting high quality workforce who would otherwise not be able to work).

> **Comments:**
> **username_18**: "women are not paid less for the same work" + "The real unexplained wage gap is 94%". So, which is it?  
> **username_19**: *"An overwhelming majority of the wage gap has valid rational economic explanations"* - the existence of an economic rationale, does not establish that the structure of the system itself, in which differentials emerge as "rational", is not discriminatory precisely because discrimination becomes rational rather than irrational in such a system. Nor that those who attempt to resist change to that system do not have discriminatory motives. For example, stiff criminal penalties can quickly make discrimination irrational, but their imposition is resisted due to discriminatory attitudes.  
> **username_17**: @njzk2 - women are paid less for different work. The problem is that women DO different work (in various ways) which does result in lower pay. In other words, the answer to OP's question is "because women aren't paid less for the same work, all other things being equal". There is no research to clearly explain 94% gap, but the most obvious and likely largest part of that gap is child rearing, which is nearly impossible to make "same" between men and women (and the only countries that tried - nordic - found MORE wage gap than the others) - and that gap reason makes it impossible to arbitrage  
> **username_20**: Why would autism being more common in men explain women having lower incomes? Autistic adults have an 86% unemployment rate. Higher rate of autism would therefore lower the average income, not increase it.  
> **username_18**: @DVK 94% is after normalizing for occupation. Women are paid less for the same work. "There's no research but it's obvious" is, obviously, not an answer.  
> **username_17**: @EttinaKitten - there's a difference between full on autism (where you can't function) and high functioning autism (which usually is Aspergers) where a person is perfectly employable. Think Einstein or Bill Gates (who many experts agree are on the spectrum, with the usual caveat of diagnosing people by proxy). Being able to zone in on programming or other high-paying skill for 16 hours a day is easier for an Aspie than for a neurotypical, which in the modern world translates to higher chances to get well paid.  
> **username_17**: @njzk2 - I'm sorry, if you don't understand that "occupation" is not same as "work", I can't explain it in comments. It's easy to control for occupation as that is a very discreet and obvious to measure variable. It simply isn't enough for real economics.  
> **username_18**: @DVK if that's the explanation, that occupation and work are different, then why do you claim that "the unexplained wage gap is 94%" (should be 93.4, by your own numbers, btw, thanks for the rounding, which is not nothing)? Seems like that should be your explanation, no, that the researchers are failing to normalize because they don't understand what work is?  
> **username_12**: @EttinaKitten because the income statistic in question is conditioned on employment.  
> **username_17**: @njzk2 - researchers don't aren't failing to normalize. People who push questionable political goals based on misinterpreting research do. Researchers did normalize which is when they came up with 94% gap instead of 77%; and as you see from another link, NO gap (or slight gap towards women in UK) when they also normalize away parenthood as a variable.  
> **username_18**: @DVK, so, parenthood is a variable? how does that work? can you remove parenthood and keep "all else being equal"? How do you know that 94% comes from misinterpreting research, or having political goals? Do you have studies to back that claim?  
> **username_20**: @DVK I know that. 60-90% of people on the autism spectrum are high functioning, so that 86% unemployment rate includes many high functioning individuals, too. Being smart and verbal and good at focusing doesn't necessarily mean you're employable.  
> **username_21**: Just need to point out that my employer has on-site child care and is far from being insolvent.  
> **username_17**: @RedSonja - (1) smaller employers would have far harder time to organize this. (2) The first time some incident happens, a lawsuit would wipe out the company. (3) There are not enough qualified child care providers overall - hence, the more you open this, the more expensive it will be to hire caregivers. There are other challenges as well. It's NOT as simple an issue as it appears to be (which is not to say it is not   possible to address)  

---

### Answer by username_23 on 2021-03-15. Score: 13

I must preface that the original question as it stands is way too broad.

It probably needs to be cut down into smaller parts, but that's hard to know how to do if you are a layperson. This question really is an enormous one, and although there are a lot of answers that give bits and pieces of info, because the question is so broad, there are going to be lots of opportunities for people to answer this question with a heavy slant one way or another, with varying quality of information. It's easy to cite a few papers in isolation and present it as the smack down conclusion for one side or another.

**Is there gender discrimination?**

* *Women are paid less than men for various reasons, and it's
  complicated.*
* *Some of it is gender discrimination, and some of it isn't.*
* *It's very easy to misconstrue how strong or weak gender
  discrimination's impact is.*

Even if the total pay differential explained by discrimination was only 3-5% as some people so far have suggested (it is almost certainly not), that is still often the equivalent of two or three raises at a job. I remind everyone participating in this discussion to be civil, according to the rules of the site, and not to use the presentation of "objective fact" as an excuse to be untactful or ungraceful with how you present your case.

Let me give my best effort to scratch the surface of this question. I try to provide direct, un-paywalled PDF links to papers where I can. Otherwise I will link paywalled links to the papers.

For now, I will only discuss a few of the papers provided below, and will leave the other papers as relevant further reading. Some of the papers are much more technical than others, and some papers probably can be left as further reading, rather than having any additional commentary. I will also consider making this answer a community/wiki answer, so that others may provide good commentary on the extra papers, or provide new papers that I have missed, since there are so many papers that are relevant to this topic.

---

***Labor Demand and Labor Supply***

---

* **Sullivan (1989)** *[Monopsony Power in the Market for Nurses](https://www.nber.org/system/files/working_papers/w3031/w3031.pdf)*

Sometimes pay differentials are attributed to a "taste for discrimination" as it is known in the literature (either by consumers or employers). The existence of monopsony power, which is where there is not perfect competition for the supply of labor and an employer can push wages below the marginal product of labor (the value of your work), may be an alternative explanation for a wage differential.

There is evidence that monopsony power does exist in markets such as the nursing industry. Nurses may see hospitals as highly differentiated (different labor practices, safety, location, etc.), and "wage standardization" programs may effectively amount to collusion to depress wages among hospitals.

If monopsony power by firms depresses wages though, then this raises the question: Does it do so equally for men and women?

* **Ransom and Oaxaca (2010)** *[New Market Power Models and Sex Differences in Pay](https://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.322.3677&rep=rep1&type=pdf)*
* **Hirsch, Schank, and Schnabel (2010)** [*Differences in Labor Supply to Monopsonistic Firms and the Gender Pay Gap: An Empirical Analysis Using Linked Employer-Employee Data from Germany*](https://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.583.9947&rep=rep1&type=pdf)

These are two papers that study pretty different markets (US grocery stores data and German employer-employee data), but both try to achieve the same goal of estimating the labor supply elasticity between men and women. That is, can firms exert more wage pressure on one group compared to another? The interesting thing about these studies is that they look at how elastic both groups are at the level of the firm, and not just at the level of the market. What does this mean?

In the labor market as a whole, women are usually observed to be more elastic than men, implying that for one reason or another, they are more sensitive to wage differences. Does this mean they can afford to be choosier with which jobs they take? Well, once workers are *within* the firm, for some reason women then are less elastic than men, which means that the firm has greater wage setting power over women due to monopsony power. From the second paper:

> Our results imply that about one third of the gender pay gap might be
> wage discrimination by profit-maximizing monopsonistic employers.

The second paper tries to build off previous work (including some from the authors of the first paper) by trying to model search frictions. They do not wish to assume that transitioning to and from non-employment is wage-inelastic (that wages do not affect how easy it is to quit and look for a better offer). An open question that these papers don't answer is why exactly women may end up being more inelastic than men, more unwilling to quit jobs that may underpay them.

But despite the healthy caution the paper gives as to how much of a role gender discrimination plays, consider the note from the second paper:

> Whereas Robinsonian discrimination provides a relatively simple
> explanation for the persisting empirical regularity of the gender pay
> gap, it is difficult to interpret this pay gap as a long-run
> equilibrium outcome using Becker’s (1971) concept
> of discrimination due to distaste without assuming some sort of market
> power on the demand-side. Moreover, employers’ actions remain
> profit-maximizing when engaging in Robinsonian discrimination, whereas
> they are biased by costly prejudices when engaging in discrimination
> due to distaste because their profits are reduced in this case even
> if employers have considerable monopsony power (see, e.g.,
> Bowlus & Eckstein 2002)

This means that when you consider older models of price discrimination (e.g. Becker), where discrimination due to distaste is mostly waved away due to the desire to be profit-maximizing, those models consistently don't hold up in real life, and models that include explicit discrimination (e.g. Robinson) are more consistent with what we actually see in the data.

* **Cherchye, De Rock, and Vermeulen (2012)** *[Married with children: A collective labor supply model with detailed time use and intrahousehold expenditure information](https://www.aeaweb.org/articles?id=10.1257/aer.102.7.3377)*

(*I do not provide a pdf to the 2010 version as there seem to be significant changes between that paper and the final copy in 2012. I cannot currently find a straight link to the 2012 copy.*)

This paper looks at improving traditional models of household production in a few ways, with one of them being by modelling child outcomes as a public good. As a whole it looks into a big question: if the wages of a mother or father changes, how does that affect who takes care of children, and does the gender of the parent matter in child outcomes? That is, is it better to empower men or women if looking to raise child welfare?

One reason people argue that the wage differential between men and women isn't inherently gender discrimination is because women naturally prefer to stay at home and say, take care of children, or commit themselves more to household production. Then, rational employers who are profit maximizing may pay a woman and man of equal skill differently because they expect the women may end up working for fewer hours in the future, even if the woman currently is unmarried or has no kids. Before going any further, it must be noted that this reasoning by itself would constitute statistical discrimination, which has its own literature.

However, this paper makes some interesting empirical findings regarding the household production angle. Men and women do have different preferences for what things to work on for household production, including childcare, and when you look at who is more effective at childcare, the authors find that given equal time with kids, an extra unit of time spent with the children is slightly more effective if done by the mother than with the father. So far seems normal, right?

But because there is such a large disparity between how much time the father and mother spend time with children, it would be more effective to empower men (!) to spend more time with children. If you look at the effects of raising a father's wage compared to the wife, what happens is that the man spends more time working and less on both childcare and other household production. The woman will spend more time on both market labor, childcare, and other household production, with less time in leisure.

Therefore, large pay differentials can adversely affect child outcomes, because if firms acting in such an aforementioned "profit-maximizing" way end up paying men and women of equal skill differently, it will not account for public goods such as childhood outcomes. The problem gets more complicated when you consider what happens when a wife's wage increases compared to the husband's wage. If the woman's initial wage is low, wage increases will actually decrease market production, until the wage is increased to around the average wage.

Modelling a household's use of time is very complicated. You cannot perfectly explain away the gender pay gap using just household preferences.

* **Rosenzweig and Schultz (1985)** *[The Demand for and Supply of Births: Fertility and its Life Cycle Consequences](https://www.jstor.org/stable/1818641)*
* **Goldin and Katz (2012)** *[The Power of the Pill: Oral Contraceptives and Women’s Career and Marriage Decisions](https://dash.harvard.edu/bitstream/handle/1/2624453/Goldin_PowerPill.pdf?sequence=4&isAllowed=y)*

---

***Human Capital Investment***

---

* **Dougherty (2005)** *[Why is the Rate of Return to Schooling Higher for Women than for Men?](http://eprints.lse.ac.uk/20034/1/Why_is_the_Rate_of_Return_to_Schooling_Higher_For_Women_Than_For_Men.pdf)*

What can be attributed to the differences in the rate of return on education between men and women? Even when controlling for personal characteristics, women are paid less than men, and part of the reason for the increased rate of return women have to schooling, is that better educated women seem to be better equipped to deal with discrimination. This paper dis-aggregates an index of discrimination using Oaxaca decompositions based on years of schooling, in order to make this point. Not all of the difference in the rate of return to schooling is attributable to discrimination however. Women choose to work in sectors where education is highly valued.

* **Henderson, Polachek, and Wang (2011)** *[Heterogeneity in Schooling Rates of Return](http://citeseerx.ist.psu.edu/viewdoc/download;jsessionid=6E1ABD4EFFB157B6136204D5581EED2A?doi=10.1.1.484.4213&rep=rep1&type=pdf)*
* **Mincer and Polachek (1974)** *[Family Investments in Human Capital: Earnings of Women](https://www.nber.org/system/files/chapters/c3685/c3685.pdf)*

---

***Compensating Wage Differentials and Discrimination***

---

* **Blau and Kahn (2003)** *[The US Gender Pay Gap in the 1990s: Slowing Convergence](http://ftp.iza.org/dp2176.pdf)*
* **Goldin and Katz (2006)** *[The Homecoming of American College Women: The Reversal of the College Gender Gap](https://www.nber.org/system/files/working_papers/w12139/w12139.pdf)*
* **Hammermesh and Biddle (1994)** *[Beauty and the Labor Market](https://www.ux1.eiu.edu/%7Elsghent/hamerbiddle.pdf)*

From the abstract:

> Better-looking people sort into occupations where beauty may be more productive; but the impact of individuals' looks is mostly independent of occupation, suggesting the existence of pure employer discrimination.

* **Oaxaca and Ransom (1994)** *[On discrimination and the decomposition of wage differentials](https://www-perso.gate.cnrs.fr/goffette-nagot/l3econometrie/OaxacaRansom_DiscriminationWageDifferentials_JEconometrics1994.pdf)*

---

***Statistical Discrimination***

---

Most work on statistical discrimination focuses on race. Suggestions for work more focused on gender are particularly appreciated.

* **Arrow (1973)** *[The Theory of Discrimination](https://www.jstor.org/stable/j.ctt13x10hs)*

*(This is from a larger book on labor market discrimination.)*

* **Lang and Lehmann (2012)** *[Racial Discrimination in the Labor Market: Theory and Empirics](https://www.nber.org/system/files/working_papers/w17450/w17450.pdf)*

*(This paper may also fit in the section below.)*

Statistical discrimination based on rational stereotypes are not sufficient to explain differentials in employment duration.

* **Schwab (1986)** *[Is Statistical Discrimination Efficient?](https://www.jstor.org/stable/1804140?seq=1)*
* **Bielby and Baron (1986)** *[Men and Women at Work: Sex Segregation and Statistical Discrimination](https://www.journals.uchicago.edu/doi/abs/10.1086/228350)*

---

***Non-Wage Discrimination***

---

Not all discrimination is through wages. The heavy use of wage equations in the discrimination literature leaves some gaps when it comes to non-pecuniary benefits, discrimination in offers, unemployment duration, risk of non-employment, hours offered, etc.

For example, consider if all men and women of equal skill have the same cutoffs for when they would accept or reject a job. Men and women of the same skill then have a different distribution of offers they may receive due to discrimination, with men receiving on average higher offers. Then over time, one would observe that men and women will select into jobs that pay based on their skill, with some gap because men on average may get better offers. The magnitude of discrimination (the full distribution of offers) may be obscured by the observed wages that are accepted.

* **Eckstein and Wolpin (1999)** *[Estimating The Effect Of Racial Discrimination On First Job Wage Offers](https://faculty.idc.ac.il/Eckstein/pdf/Wolpin-Eckstein.pdf)*

This paper looks particularly at race, rather than gender, but can be further applied to gender in newer studies. Discrimination in terms of wages *offered* tend to result in smaller observed discrimination if you only look at wages *accepted*. In this study, the differences between ethnic groups was three times greater for wages offered than for wages accepted.

---

**Closing Comments**

---

The gender discrimination literature has many facets, with a lot of plausible evidence for its existence, from all sorts of angles. Many related papers on gender discrimination can be found if you look through the citations of the papers I have listed above. The statistics that politicians may cite are not the same as what economists will actually tell you, so take whatever activist, blog, editorial/opinion column, or social media personality says with a grain of salt.

**I will not provide a hard number for how much of the gender pay gap is attributable to discrimination because doing so accurately is almost impossible.** Anyone who tells you a hard number may indeed be (inadvertently) lying to you, but this is a very difficult topic to approach, so some grace is needed when we discuss gender discrimination.

Comments on papers to add, or criticisms of papers listed are welcome.

> **Comments:**
> **username_0**: Writing this answer must have taken a lot of time, and you deserve appreciation, but it's very hard to digest for me. For example, I have no idea what this paragraph means: "What can be attributed to [...]". Better educated women seem to be better equipped to deal with discrimination, and they tend to choose to work in sectors where education is highly valued, BUT they are paid less? How is it possible? It seems contradictory and I don't know what to make of this and some other paragraphs  
> **username_23**: A woman can work in an industry that pays higher than average, but still be paid less than a man in that industry. It's not a blanket statement saying "oh, woman want to work in better industries, but get paid less *in general*". So there is some care that needs to be put into reading what is written. If my explanations seem awkward, it is always best to try and read the main paper (although I have tried to make my writing more accessible than the main papers, since they can be pretty technical.) Hope this explanation helps.  
> **username_5**: Great work! Basically a literature review this answer  
> **username_17**: "An open question that these papers don't answer is why exactly women may end up being more inelastic than men, more unwilling to quit jobs that may underpay them" - I would bet a lot, that if someone did proper research, they would find that the same outcome applies to masculine-presenting lesbians, maybe to lesser degree. If so, it would provide proof of an obvious explanation - men are less inelastic than women because they **have to be** - women care more about money in their partner choice. So men (+ lesbians who are more masculine) can't afford to be inelastic for social reasons  

---

### Answer by username_7 on 2021-03-13. Score: 9

It has been shown [numerous times](https://www.nytimes.com/2017/05/13/upshot/the-gender-pay-gap-is-largely-because-of-motherhood.html) that the apparent pay gap is largely due to women having to work part time or take time off for maternity leave, and that the gap is correspondingly in a narrow age range (I believe mid 20's +/- a few years). However, the statistic is often spun by computing hourly rates and averaging everybody together, and "women make less in general", despite being quoted often, is a myth.

It's often referred to more accurately as the "motherhood penalty".

Therefore, hiring more women would not save a company money. What it would do is ultimately require more employees to fill in for time off if any of the female employees took maternity leave, or it would raise the number of part time employees.


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### Answer by username_5 on 2021-03-12. Score: 9

This is an interesting question, and I don't have a good answer. Just pointing out about the second part that the canonical labour market model of Diamond-Mortensen-Pissarides views a labour market contract in terms of matching, when a surplus is shared between employer and employee through a nash bargaining mechanism. So, earning less does not necessarily mean lower marginal product in theory. Still the question of why employers do not anticipate having to end up in a higher bargained wage when they employ men and thus prefer to employ more women is very interesting. I am not aware of any literature on this. Maybe the ability to bargain better is part of skill and thus compensated? (No intention to offend anyone here, but there is quite a bit of literature showing that men are more successful in bargaining higher wages, for example [Dittrich et al. (2014)](https://onlinelibrary.wiley.com/doi/abs/10.1111/ecin.12060), [Card et al., 2015](https://academic.oup.com/qje/article-abstract/131/2/633/2606904?redirectedFrom=fulltext). Neither the literature nor me though saying that this is main cause of the wage gap).


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### Answer by username_22 on 2021-03-13. Score: 7

This is a very good question and I agree with the answer about the 'wage gap'. Education is a point that I want to add here.

A survey was recently conducted in the construction labour market in China. Women have relatively low hourly salary than men. We may think this's because women are not able to carry heavy materials. On the contrary, the majority of the workers carrying heavy materials are women. Those who in charge of the technical work are men majorly, and they have a better salary.

Is this because women are not capable of the work? No. Those female skilled workers can work as good as men. But very few women were taught to do technical works before. The 'masters' don't accept female apprentice just for 'tradition' reasons.

What we are doing now is to make equality to be a tradition of the future. Men and women have equality in education, and then equality in the job market.

Reference (in Chinese): <https://www.zhihu.com/question/358322493>


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### Answer by username_24 on 2021-03-31. Score: 5

The gender pay gap is not statistical significant, as claimed by the mainstream economists.

Check this AER paper by a famous female scholar:

**C. Goldin (2014) A Grand Gender Convergence: Its Last Chapter,** AER
<https://pubs.aeaweb.org/doi/pdf/10.1257/aer.104.4.1091>


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