Monday 12 September 2011

That pesky pay gap

It's not going to go away so long as folks of different genders have, on average, different preferences over work/home balance. I'd noted how a recent NZ study promoted by the Ministry of Women's Affairs bemoaned that male Commerce grads earned more than female Commerce grads without noting the rather large difference in the gender makeup of the different majors: finance versus marketing, for instance.

The City Journal summarizes a whole host of such studies (HT: @isegoria):

But proofers often make the claim that women earn less than men doing the exact same job. They can’t possibly know that. The Labor Department’s occupational categories can be so large that a woman could drive a truck through them. Among “physicians and surgeons,” for example, women make only 64.2 percent of what men make. Outrageous, right? Not if you consider that there are dozens of specialties in medicine: some, like cardiac surgery, require years of extra training, grueling hours, and life-and-death procedures; others, like pediatrics, are less demanding and consequently less highly rewarded. Only 16 percent of surgeons, but a full 50 percent of pediatricians, are women. So the statement that female doctors make only 64.2 percent of what men make is really on the order of a tautology, much like saying that a surgeon working 50 hours a week makes significantly more than a pediatrician working 37.
The most compelling research into the impact of children on women’s careers and earnings—one that also casts light on why women are a rarity at the highest levels of the corporate and financial world—comes from a 2010 article in the American Economic Journal by Marianne Bertrand of the University of Chicago and Claudia Goldin and Lawrence Katz of Harvard. The authors selected nearly 2,500 MBAs who graduated between 1990 and 2006 from the University of Chicago’s Booth School of Business and followed them as they made their way through the early stages of their careers. If there were discrimination to be found here, Goldin would be your woman. She is coauthor of a renowned 2000 study showing that blind auditions significantly increased the likelihood that an orchestra would hire female musicians.
Here’s what the authors found: right after graduation, men and women had nearly identical earnings and working hours. Over the next ten years, however, women fell way behind. Survey questions revealed three reasons for this. First and least important, men had taken more finance courses and received better grades in those courses, while women had taken more marketing classes. Second, women had more career interruptions. Third and most important, mothers worked fewer hours. “The careers of MBA mothers slow down substantially within a few years of first birth,” the authors wrote. Though 90 percent of women were employed full-time and year-round immediately following graduation, that was the case with only 80 percent five years out, 70 percent nine years out, and 62 percent ten or more years out—and only about half of women with children were working full-time ten years after graduation. By contrast, almost all the male grads were working full-time and year-round. Furthermore, MBA mothers, especially those with higher-earning spouses, “actively chose” family-friendly workplaces that would allow them to avoid long hours, even if it meant lowering their chances to climb the greasy pole.
In other words, these female MBAs bought tickets for what is commonly called the “mommy track.” 
Mommy track vs partner track also holds for lawyers.

Flexible work arrangements are worth a lot more for the partner planning on being the primary care-giver. More women than men choose to take on that role. And that has to turn into measured wage differentials if the non-pecuniary benefits of flex-time aren't measured as part of the total compensation bundle.


  1. that pesky pay gap, completely away from the gender thing, but here is a real pay gap,
    I am looking down from the condominium I stay at here in Bangkok, I am looking at some workers, all men,laying a concrete foundation for what we think is to be an open food market.

    They built the side trenches and base with shovels, they raked the dirt and rocks flat by hand,and they carry the concrete away by wheel barrow, like your grandfather did ,
    and they straighten and level with sticks that are almost kind of flat, but not very long.
    Their backs are bent in the herniated disc position, there are no appliances here, or machines,they work in the blazing sun, and they only give up when the monsoon rain drenches them out again,

    I just had to know, I asked my girlfriend come down with me and ask them what their wages are,
    it is too sunny she said I get sun on my face, so we waited till an early warning cloud came over,went down she talked Thai to them and the answer is 280 bahts per day,

    280 bahts for a working man all day, that’s $NZ11 in your money,
    I know what you think, Thailand is cheap, right?
    well that’s wrong Thailand is not cheap,
    Average price per square meter of housing here is 150,000 baht and upward,
    Buy yourself a family home Thai man, that’s $NZ6000 per meter, 500 days of work for one metre of home.
    Compare with Christchurch maybe ring Hugh Pavletich, could be $NZ3000 per meter in Christchurch
    this is a serious wage pay gap, how many people do you know NZ earning eleven dollars a day
    for working like a horse and a dog

  2. A large part of the pay gap between male and female surgeons is that more male surgeons have private practices (which earn far more money), whilst women surgeons tend to stick with public system.

    However, in general you are right the salary ceiling is still quite solid in high level occupations.