There are substantial differences in the size of gender gap pays around the world. The analysis of Olivetti and Petrongolo gives an interesting perspective on this, cross-referencing data from the United States, the United Kingdom, and the EU countries. There evidence points toward three main groups within these countries: the United States and the United Kingdom being the most unequal, then central and northern Europe, and then the central and southern European states making up the last and most equal group. There is also a striking variation in employment gaps internationally, which are parallel to the gender gap pay differences.
So why is this? Petrongolo and Olivetti argue that it might stem from the differences in labor supply behavior and the role of household composition and social norms. Also, differences in social attitudes toward female employment may play a big role. Unionization of labor markets and minimum wage levels could also play a role. The countries where men typically provide for the household and women stay at home with the children, i.e. southern and central Europe, usually feature smaller gender gap pays. Countries such as the US and Canada, where it is typical for both parents to work, are usually more unequal in payment. The reason for this is probably the different process of selection into employment rather than more equal pay. As female participation rates in Catholic countries and Greece (southern Europe) are typically low and only concentrated on the high-end spectrum, it therefore makes sense that statistically there are less wage gaps for these high-wage jobs. If corrected for lower participation rates, the wage gap itself becomes akin to that of the Anglo-Saxon countries (i.e. Northern and central Europe, Canada and the USA). The Anglo-Saxon countries have corrected this gender participation gap problem, yet the wage gap either remains the same or grows.
Olivetti and Petrongolo come to the conclusion that disentangling supply and demand factors for female employment if the next step for understanding existing variation in gender pay gaps. They mention the work of Fernandez and Fogli, and Fortin, which emphasize the role of “soft variables” such as the cultural beliefs about gender roles and family values, as well as the individual attitudes towards greed, ambition, and altruism. These might just be the most defining factors in the gender wage gap.
Even in our modern world, we find high gender wage gaps in those countries we typically consider the most developed. Although there has been some progress from the 1930s to the 1980s, the gender wage gap shrink stalled out over the last twenty years. To continue work to resolve this problem, we must find the reason for it existing in the first place.
Unequal Pay or Unequal Employment? A Cross‐Country Analysis of Gender Gaps
By Claudia Olivetti and Barbara Petrongolo
Journal of Labor Economics, Vol. 26, No 4 (October 2008) pp. 621-654