Gender pay gap
The gender pay gap or gender wage gap is the average difference between the remuneration for men and women who are employed. In most countries, women are paid less than men for the same work.
- non-adjusted pay gap is the average difference in yearly earnings between male and female workers
- adjusted pay gap is the difference between how much men and women make for the same work, and it takes into account differences in hours worked, occupations chosen, education attained, and job experience.
The global unadjusted gender pay gap is 68.5%. Recently, the pay gap has decreased most rapidly in Global South developing countries. In the European Union, there has been little change in the gender pay gap in the 21st century. In 2024 in the United States, according to Pew Research, women earned 85% as much as men, slightly up from 81% in 2003. Developed Asian economies have also entered a stage of relative stability, yet income disparities remain relatively larger compared with those in Western economies.
The adjusted gender pay gap is much smaller. However, this is considered a textbook error in econometrics because occupational sorting may itself be an outcome of gender discrimination, which would make it a bad control. By controlling for job characteristics, the analyst introduces collider bias into the analysis, making it impossible to draw valid conclusions about the role of gender discrimination on earnings. Although rewarding greater ability and productivity with increased responsibilities and compensation is generally regarded as a reasonable principle, evaluations of equality should also consider gender differences in career opportunities and trajectories. More comprehensive models are needed to assess equality fairly without bias or overcorrection.
Causes for gender pay gaps include having children and parental leave, gender discrimination, and gender norms. In the EU around two-thirds of the gender overall earnings gap is associated with lower women's working hours (gender hours gap) and lower women's employment rate (gender employment gap). The gender pay gap can be a problem from a public policy perspective in developing countries because it reduces economic output and means that women are more likely to be dependent upon welfare payments, especially in old age.