Understanding Gender Based Wage Gap Smaher ali Alharbi Virginia State University Understanding Gender Based Wage Gap If we look across the industries, wage rates differ drastically, and these differences are attributed to how much people value certain occupation or the goods and services produced within certain industry. While it’s common for sportsmen to have millions of dollars of revenue annually, common labor often has to work for minimum wage. To explain these differences one can adopt social, cultural or economic framework and conclude that certain jobs require minimum skill and education, while others require more dedication and investment. Additionally, we can say that some give consumers higher value, and thus people are ready to pay more to get access to those goods and services. While some of the differences in wage rates can seem quite unfair, the fact that wages for basketball player and a manufacturer are different, can be explained by common sense, however, when it comes to more complicated issues, like gender-based or race-based pay gaps, explaining those becomes much harder. This becomes even more confusing when we control for education, age, experience, and industry and observe that a man and a woman with similar background, working on the same position and doing same job have different wage rates. The goal of this research paper is to evaluate gender gap, understand some of the variables which can explain it and suggest policies that will decrease gender-based wage gap. To accomplish this, I will rely on existing literature that addresses the topic and make conclusions based on existing scientific knowledge about this topic. While this paper won’t conduct regression analysis, it will discuss a potential model for building one; based on this model, one could assess how various independent variables affect gender based wage differences and what needs to be done to change that. “While the gender gap in the performance of housework has narrowed in many countries for which data are available, it remains universal and large.” (Sayer, 2010). This existing gap makes the problem extremely important. Another reason why this topic is important is that by classical theory about labor market, we expect that wage rate within the industry, for the same position should be the same, because market regulated the wage and workers and employers simply have to accept it; however, in real like employers have higher negotiating power, and they can pretty much set wages as they prefer. What’s interesting is that, for some reason sometimes women are offered a different rate than men. This happens even then we control for various variables. So, what causes women to get lower wages? Are they worse employees? Are they less skilled? Or is it employer who simply likes to discriminate against women? Literature Review Considering that our primary emphasis is on existing wage gap in Unites States, looki ...

1. Understanding Gender Based Wage Gap
Smaher ali Alharbi
Virginia State University

2. Understanding Gender Based Wage Gap
If we look across the industries, wage rates differ drastically,
and these differences are attributed to how much people value
certain occupation or the goods and services produced within
certain industry. While it’s common for sportsmen to have
millions of dollars of revenue annually, common labor often has
to work for minimum wage. To explain these differences one
can adopt social, cultural or economic framework and conclude
that certain jobs require minimum skill and education, while
others require more dedication and investment. Additionally, we
can say that some give consumers higher value, and thus people
are ready to pay more to get access to those goods and services.
While some of the differences in wage rates can seem quite
unfair, the fact that wages for basketball player and a
manufacturer are different, can be explained by common sense,
however, when it comes to more complicated issues, like
gender-based or race-based pay gaps, explaining those becomes
much harder. This becomes even more confusing when we
control for education, age, experience, and industry and observe
that a man and a woman with similar background, working on
the same position and doing same job have different wage rates.
The goal of this research paper is to evaluate gender gap,
understand some of the variables which can explain it and

3. suggest policies that will decrease gender-based wage gap. To
accomplish this, I will rely on existing literature that addresses
the topic and make conclusions based on existing scientific
knowledge about this topic. While this paper won’t conduct
regression analysis, it will discuss a potential model for
building one; based on this model, one could assess how various
independent variables affect gender based wage differences and
what needs to be done to change that.
“While the gender gap in the performance of housework has
narrowed in many countries for which data are available, it
remains universal and large.” (Sayer, 2010). This existing gap
makes the problem extremely important. Another reason why
this topic is important is that by classical theory about labor
market, we expect that wage rate within the industry, for the
same position should be the same, because market regulated the
wage and workers and employers simply have to accept it;
however, in real like employers have higher negotiating power,
and they can pretty much set wages as they prefer. What’s
interesting is that, for some reason sometimes women are
offered a different rate than men. This happens even then we
control for various variables. So, what causes women to get
lower wages? Are they worse employees? Are they less skilled?
Or is it employer who simply likes to discriminate against
women?

4. Literature Review
Considering that our primary emphasis is on existing wage gap
in Unites States, looking at some of the studies conducted using
American data will be extremely helpful. However, data and
findings from other countries will also be considered, and
especially interesting would be policies adopted by other
countries to solve the problem.
Mandel and Semyonov (2014) did an extensive study about
gender pay gap covering 1970-2010. They looked at
convergence and divergence patterns and analyzed what caused
these changes in pay. Also, they separated public sector and
private sector, and saw different trends. The model that is used
for studying pay gaps includes explained components which
arise because of some differences between women and men and
unexplained components, which means that basically, there is a
gap because of discrimination rather than any real reason. They
found that variables that explain wage gap include gender
differences in human-capital resources, some of the
sociodemographic variables, and occupational segregation.
According to the findings the most important reason why men
are women are paid differentially, is difference in working
hours. Another reason is that women are only hired for low
paying jobs, and this creates occupational segregation.
However, there is a large portion of unexplained wage gap,
which suggests that women are paid less, just based on their
gender. Another interesting finding was that in public sector,
where there is more regulation, wage gap is smaller (Mandel &
Semyonov, 2014).
In addition to looking at wage discrimination for women in
general, Mandel and Semyonov also assessed how gender-based
gap looks when we take into account race as well. So, basically
they compared not only differences among males and females,
but also wage gaps for white males vs. black males and white
females vs. black females. They found that there is greater pay
gap among white and black men than among white and black

5. females. This means that black men face more discrimination,
because despite being a man, they are not paid more. This can
be explained by the fact that black men are victims of negative
stereotypes, which affects their earnings. Interestingly, in 1970-
1980s racial gaps were decreasing for both genders, but this
decline stopped in 2000 because of various reasons, including
“overall income inequality, stagnation in occupational
segregation, and an increase in the unexplained portion of the
gap, a portion we contribute to economic discrimination”
(Mandel & Semyonov, 2016, p. 1039). Overall, they concluded
that wage gap is more gendered than racialized.
Another study by Kim (2000) studied wage-setting procedures
in California and Washington and concluded that gender biases
arise because of the nature of wage-setting procedures. This
study provides historical background about how wages were set,
how it resulted in wage discrimination and how that continued
even to this day. Labor market models that are taught to
students in colleges assumes that labor market is a competitive
market, and thus employers and employees are price takers.
However, reality is very different and as Dunlop’s (1957) study
shows wages for truck drivers within the same city can range at
100%. Kim explains this by the nature of the salary survey that
firms fill out to provide wage data of their employees. Turns out
these required that male and female salaries were written
separately. In early times women working on same position as
men were paid less and this was reflected in the survey. So,
next generation of employers who looked as salary surveys to
determine wages saw that women working on same position is
paid less and they copied the trend. Thus, even today, wages are
reported separately, and there are still differences, because
employers see that other companies do the same. Also,
historically, men have been better at negotiating higher wages
than females, because they weren’t part of the unions, and this
also contributed to the discrimination (Kim, 2000).
Yamada, Koshal, Miyazima and Koshal (2002) studied labor
survey data of Japan for the year 1998, and accessed gender

6. based pay gap by controlling for age, experience and education
levels. That means that they were comparing wages for males
and females that were of the same age, and had same experience
and education in order to eliminate wage differences due to
differences in skills. They didn’t specify industries, so, we
could be comparing woman, aged 25, with 12 years of education
and a man with the same background working in different
industries. According to the authors, the reason we see
differences in women’s and men’s wages in Japan is more
related to occupational discrimination rather than pay
discrimination. This means that women in Japan earn less,
because they are only hired for secretary and other low-skill
jobs. Nevertheless, even when they are hired for the same job,
women still earn only 78-81% of the wages that males earn
(Yamada & Koshal & Miyazima and Koshal, 2002).
Besen-Cassino (2008) conducted an interesting study that tried
to see how early these gender pay gap emerges and titled his
study as a “cost of being a girl”. Considering that in USA a lot
of people start working while they are still teenagers, this
allows us to observe wage patterns among young girls and boys
and see if wage gap exists right from the beginning. While no
differences were found in wages for girls and boys aged 12-13,
at age 14 these differences become pronounced and widens with
age. This result was explained by the fact that at 12-13 girls and
boys work on similar jobs, earning similar pays, while from the
age of 14 jobs start differentiating and males enter occupations
that are paying more compared to the job options that women
choose (Besen-Cassino, 2008). It could be the case that choices
given to women at such a young age “teach” them the industries
where they can work, and thus they stick with low-paying
occupations for the rest of their lives. However, the bigger
problem is that when man and a woman get same education and
same position and they are still getting paid differently.
Objectives and

7. Solution
s
Based on these articles, it becomes clear that gender pay gap is
a complex subject that is influenced by various variables. Some
of the pay gap is explained by occupational segregation, which
means that women end up working for generally low-paying
jobs, and this is the reason why women earn less than men.
While it is fair that some industries are paying more than
others, what needs to be addressed is the fact that it’s mostly
women filling those positions. The most important question is
what variables have shaped this reality? There could be
objective reasons that women are getting more freedom from
such jobs, and their schedules are more flexible, or they like
those jobs better than other jobs. In this case, there’s nothing
we can do to oppose occupational segregation, because women
have chosen to work in low-paying positions. However, there is
another variable which is really important to consider: are these
women taught that they should work for specific positions
which are more suited for women? If that’s the case, then it’s a
cultural problem which doesn’t give women choice to pursue
their interests and work wherever they want.
Another even bigger problem is wage gap that exists when

8. women and men work in the same industry, on the same
position, do same tasks, and still are paid different wages. In
this case, we make sure that both same similar education,
working experience and age, and still these differences persist.
One of the studies concluded that the reason older men are paid
more than older women is because the age is viewed differently
among men and women. Author explained that age is viewed
more favorably among men, which is a very discriminatory
reason for paying different wage rates (Angle & Wissman,
1983). What can be done to solve this problem? There are
several things that I would suggest. First of all, considering that
regulating wages in public sector is easier, because government
can’t openly discriminate against women, public sector should
be the first place where this change begins. By making women
unions stronger, making their voices more important, they can
lobby for higher wages. Once gender pay gap is closed in public
sector and women will start choosing public sector jobs over
private sector jobs, private sector employees will reconsider
their offers and hopefully shrink the gap.
Additionally, gender-based employment stereotypes need to be
addressed and women need to learn that there is no job that is
specifically created for men. Engineers, politicians, scientists,
farmers are occupations that require specific knowledge, not
specific gender. This will empower women and allow them to
pursue whatever they want, thus diminishing occupational

9. segregation.
Finally, we saw that there is a large unexplained portion of
wage discrimination. This means that it occurs not because
employers think that women are less capable, less educated or
less productive. It happens because employers see a woman and
decide to discriminate her. How should we address this?
Probably education is still one of the answers, because raising
up children who don’t have gender based stereotypes will lead
to them becoming fair employers. Meanwhile, in short run
government can make it illegal to pay men and women working
on same position different wages. However, this is very unlikely
to happen, because government won’t intervene in private
sector. Another suggestion is that maybe we should just expose
the companies that do this, and boycott them, however this is
also hard considering that salary related information is
confidential.
Methodology
As noted before, this paper won’t attempt to run a regression
and analyze specific data, however, the question that I would
analyze is how do wages differ for men and women with highest
education level. My hypothesis is that women and men who got
PhDs and have been studying for many years to become
professional should have comparable wages when working on
the same position. However, there might still be occupational

10. segregation in terms of where men vs. women start working
after they get PhD. To study this question, I would run OLS
regression, and observe differences in wages for men and
women who have PhDs. First step would be to look at job
distribution for males and females: do they go into different
industries? Do they occupy different positions? And based on
this, I would evaluate whether we observe occupational
segregation that was present in case of Japan. Independent
variables would include gender, occupation and age, while
dependent variable would be the wage. If my study finds that
there is occupation segregation which leads to males earning
more than females, my next step would be analyzing why
females chose different industries compared to men. I would not
expect that women who earned PhD feel like some jobs are not
for women, but it could be the case that they have to
compromise their jobs because of their families, children, etc.
This would show that women are given bigger burden in family
and as a result even when they can earn same wage as males,
they choose to earn less because of societal roles ascribed to
them.

11. References
Angle, J. & Wissman, D. A. (1983). Work Experience, Age and
Gender Discrimination.
Social Science Quarterly, 64, 66-84.
Besen-Cassino, Y. (2008). The Cost of Being a Girl: Gender
Earning Differentials in the Early Labor
Markets. NWSA Journal, 20(1), 146-160.
Dunlop, John T. (1957). The Task of Contemporary Wage
Theory. In John T. Dunlop (Ed.) The Theory of Wage
Determination. (Vol. 3). New York: Stockton Press.
Kim, M. (2000). Employers’ Estimates of Market Wages:
Implications for Wage Discrimination in the U.S. Feminist
Economics, 6(2), 97-114.
Mandel, H. & Semyonov, M. (2016). Going Back in Time?
Gender Differences in Trends and Sources of the Racial Pay
Gap, 1970 to 2010. American Sociological Review, 81(5), 1039-
1068.
Mandel, H. & Semyonov, M. (2014). Gender Pay Gap and
Employment Sectors: Sources of Earnings Disparities in the
United States, 1970-2010. Demography, 51, 1597-1618.

12. Sayer, L. C. (2010). Trends in Housework. In J. Treas, J., and S.
Drobnic, (Eds.), Dividing the Domestic, Men, Women, and
Household Work in Cross-National Perspective (pp. 19-38).
Stanford: Stanford University Press.
Yamada, Y., Koshal, R., Miyazima, S., Koshal, M. (2002). Role
of Gender in Wage Determination in the Production Sector in
Japan. Perspectives on Global Development and Technology, 1,
251-268