Women earning substantially less than men in all advanced economies, despite the considerable progress women have made in labour markets worldwide. This column explores the recent experience of university graduates in Germany soon after their graduation. Men and women enter college in roughly equal numbers, but more women complete their degrees.
Women enter university with slightly better high school grades but leave with slightly lower marks. Immediately after university completion, male and female full-timers work very similar number of hours, but men earn more across the pay distribution. The single most important proximate factor that explains the gap is field of study at university (Emphasis added).
Francesconi and Parey go on to say,
Several channels may be at work behind our results. One could be related to human capital considerations. The importance of ﬁeld of study indicates the relevance of pre-market choices. These also interact with subsequent market decisions (such as occupational choice) at the very beginning of professional careers (e.g. Liu 2016).
In turn, such choices could be partly driven by gender diﬀerences in preferences (e.g. risk aversion and time discounting), self-conﬁdence, competitiveness, earnings expectations, and valuation of non-wage beneﬁts (e.g. Buser et al. 2014, Mas and Pallais 2017, Reuben et al. 2017).
Another possible channel is related to statistical discrimination against women, based on employers’ difficulty in distinguishing more from less career-oriented women (e.g. Gayle and Golan 2012, Reuben et al. 2014). These mechanisms deserve more attention in future research.