First, a short summary on the gender wage gap. Men on average earn more than women. When we correct for differences in education, work experience, industry, and time outside of the workforce, the differences are much smaller but they do not disappear entirely. There’s been a lot of work done on that women often choose professions or jobs that provide less in salary but more in non-pecuniary benefits like more generous leave, easier flex-time arrangements, or fewer expectations to work more than a 40 hour week. These differences in choices can result in differences in observed pay packets even in the absence of any wage discrimination. See the posts linked at the end for some of the evidence.
One hypothesis that’s intrigued me: while wage regressions will adjust for number of children, and find that having kids hurts women’s wages, they don’t really account for employers’ forward looking expectations of job separation or time out of work due to fertility. If an employer is weighing up two job applicants, one of whom, statistically, has a much higher chance of taking 3-12 months off on maternity leave sometime in the next three or four years, then the employer might shy away from offering the kinds of jobs that require strong job attachment – the same kinds of jobs that lead to progression through the ranks and to the upper echelons of industry. Worse, this can easily lead to the kind of bad equilibrium that Glen Loury posits for human capital acquisition across races: if you expect that employers will reckon you’ll drop out of the labour force to have kids and that you’ll have a hard time getting to the top because of it, why make the human capital investments that would be necessary to do it?
Occupational segregation arguments then start having more force: women are disporportionately employed in industries with lower skill depreciation rates and lower penalties for temporary workplace separation, or in the public sector, not only because those sectors are friendlier to families but also because making investments to go into other industries are riskier where you can’t credibly signal that you won’t separate from the workforce.
My Masters student, Hayden Skilling, presented his thesis to the Department on Tuesday. Lesbians earn more than heterosexual women. Some of this is due to occupational choice, some of it is due to having had fewer kids. But some of it also seems due to that lesbians are less likely to have children than are heterosexual women. Hayden shows this in a few ways. First, the age patterning of realised fertility outcomes among lesbians and heterosexual women explains some of the wage gap between lesbians and heterosexual women after correcting for a host of other variables in Census and ACS data. Second, state-level policies that differentially affect fertility by sexual orientation also affect the wage gap between lesbians and heterosexual women in the predicted direction. For example, mandatory insurance coverage for IVF makes it easier for heterosexual couples to have kids; where the insurance coverage typically requires conception failure subsequent to an extended period of natural attempted conception, married heterosexual couples will be at an advantage. Similarly, legislation making it easier for homosexual couples to form stable legal recognized couples make it easier for them to have or jointly adopt children. Both of these affect the wage gap in the predicted ways.
I’ll be blogging more of Hayden’s work after he’s given me the final draft. In the meantime, here’s another great piece of evidence supportive of the basic hypothesis we’ve been exploring. Tobias Schmidt points me to this piece over at IZA. Stijn Baert at Ghent ran an audit study where Belgian employers were sent vitae for homosexual and heterosexual women. Apparently it’s not uncommon in Belgium not only to list your marital status but also your partner’s name on your vita. This is great because it lets them provide a signal of sexual orientation that doesn’t simultaneously signal, for lack of a better word, stroppiness: membership in a gay rights organisation as an “other interest”.
They found that there was no discrimination against homosexual women in general but that younger lesbians are more likely to get positive callbacks from potential employers than are young heterosexual women. They also expect this is due to employers’ expectations about fertility.
If an important part of the pay gap is employers’ expectations about the costs of employees’ fertility decisions, then optimal policies to address the pay gap and optimal policies to support family formation will vary. For starters, we should be reticent to impose costs on employers who hire women who then go on to form families.
- Wage gaps and Maternity
- Mommy track vs partner track
- That pesky pay gap
- Odd Japanese labour markets
- Fertile Employment
- More pay gaps
- Parental leave and benefits
- Gender pay gaps and nonpecuniary benefits
- The lesbian pay gap
- Wage discrimination: the evidence
- Critiquing the Ministry of Women’s Affairs paper on pay gaps (and here)