Pay gap persists even in sectors with large women workforce, shows data

Women account for less than one out of eight employees in large companies

A gender divide in pay is not restricted to the most male-dominated industries, as sectors that have a relatively large number of women employees also pay them less than their male counterparts.

The median pay of women is 91 per cent that of men in financial services, according to data from the CFA Institute’s “Mind the Gender Gap” report released in March 2023. It is 79 per cent that of men in information technology. Both sectors have relatively higher participation of women.

“Companies with higher female participation rates potentially have a more diverse workforce, and thus their data are subject to less noise than ones with lower female participation rates and may provide a more accurate picture,” said the study from authors Sivananth Ramachandran, Jolly Balva and Meera Siva.

Women accounted for 22.4 per cent of those working in the financial services sector and 30 per cent in information technology. The average across sectors is 12.7 per cent. These sectors, which have more women employees, provide a more accurate picture of the overall pay gap that may be affected by sectors with very few women. The ratio across sectors is 97 per cent. Some sectors, perhaps because of the presence of few women, show ratios of over 100 per cent as well (chart 1).

 

Women also have a harder time holding on to their jobs. A larger burden of child and elderly care is said to be one of the reasons, according to the study. Around 10 sectors out of the 12 studied showed a higher turnover rate for women than men. The turnover rate is the number of employees leaving as a share of the average people in the category during a given year (chart 2).
 

On Monday, Claudia Goldin, a Harvard University professor, was awarded the 2023 Nobel Prize in economics for her work on the gender gap in labour participation and pay.

In her paper titled “A Grand Gender Convergence: Its Last Chapter”, Goldin mentioned that the pay gap exists “because hours of work in many occupations are worth more when given at particular moments and when the hours are more continuous”.

The paper also highlighted that “when earnings are linear with respect to time worked the gender gap is low; when there is nonlinearity the gender gap is higher”.

The gap is also seen in surveys carried out by the Indian government.

Analysis from the recently released Periodic Labour Force Survey Annual Report 2022-23 shows that women earn 80 per cent of what a man earns in rural areas. It is 79.6 per cent in urban areas.

Education does not necessarily correct for the persistence of the gender pay gap, as seen in a 2010 study entitled “Dynamics of the Gender Gap for Young Professionals in the Financial and Corporate Sectors” from authors including University of Chicago’s Marianne Bertrand and Harvard’s Claudia Goldin and Lawrence F Katz, which looked at those with a master’s in business administration (MBA).

“The large growth in the gender gap in earnings for MBAs during their first 15 years out of school is mainly a consequence of gender differences in career interruptions and weekly hours worked,” it said.