The male-female wage gap
In 1997, the average annual earnings of women working full-year, full-time were 73% of men's. Using the average hourly wages of all employees, the ratio was 80%. This sizeable difference results mainly from differences in the study population and differences in work volume.
Male-female differences in labour market experience, education and major field of study, occupation, job responsibilities, and industry can explain half of the wage gap. Actual labour market experience and major field of study, rather than proxy measures of experience and education, further help to understand the issue.
Most studies examine the average pay differential and assume that the size and components of the gap are constant along the whole wage distribution. However, about 47% of the difference in pay at the 90th percentile and 57% at the 25th percentile are explained by differences in observable characteristics. This suggests that the 50% of the wage gap due to men and women possessing different wage characteristics at the mean fails to accurately represent the differences encountered along the wage distribution.
Questions related to pay differentials are often framed in a manner that examines the extent to which women are paid the same as comparable men. Adopting alternative comparative wage structures can lead to quite different interpretations of the components of male-female pay differentials. For example, the portion of the gap attributable to differences in worker characteristics can vary from 6% to 61%.
Marie Drolet is with the Business and Labour Market Analysis Division. She can be reached at (613) 951-5691 or firstname.lastname@example.org.