The Gender Earnings Gap: Some International Evidence

Abstract

Despite in many cases dramatic reductions in the male-female pay gap since the 1950s, gender differentials persist in all industrialized nations.However, the size of the gender gap varies considerably across countries.Published data suggest that, by the late 1980s, the Scandinavian countries, France, Australia and New Zealand had female-to-male hourly pay ratios of 80-90 percent, while other countries in Western Europe and the U.S. had pay ratios of roughly 65-75 percent.The U.S. was among the countries with the largest differentials.Only Japan with a ratio as low as 50 percent had a consistently larger gap (see Figure 1).This paper uses micrc-data to analyze international differences in the gender pay gap among a sample of ten industrialized nations.We particularly focus on explaining the surprisingly low ranking of the U.S. in comparison to other industrialized countries.An advantage of an international perspective is that countries vary considerably with respect to governmental policies, women's relative labor market qualifications and wage-setting institutions.Such variability allows one to infer reasons for differences in the pay gap and, by implication, the impact of alternative government policies.Empirical research on gender pay gaps has traditionally focused on the role of gender differences in qualifications and of differences in the treatment of otherwise equally qualified male and female workers (i.e., labor market discrimination).Analyses of trends over time in the gender differential within countries as well as intercountry comparisons of gender earnings ratios have tended to emphasize these types of gender-specific factors.An innovative feature of our study is to focus on the role of wage structure as an additional factor influencing the gender gap.To analyze the impact of wage structure, we adapt a framework developed by Juhn, Murphy and Pierce (1991) to analyze trends over time in race differentials in the U.S.Our findings suggest that labor market institutions that affect overall wage inequality have an extremely important effect on the gender earnings gap.Wage structure describes the array of prices set for various labor market skills (measured and unmeasured) and rents received for employment in particular sectors of the economy.Research on gender-specific factors influencing the pay gap suggests that men and

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