Labour Market Economics teaches us that wages are determined where the Marginal Revenue Product equals the Marginal Cost. In a perfect labour market all workers in a particular profession or job would be paid equally. But, the labour market is far from perfect – some argue it is the most imperfect market known. Therefore, differentials exist and persist into the long run. One of the most widely discussed differentials is that between male and female earnings.

1. Andy Reeve The Grange School, Hartford, Northwich September 2013
Although the Business Secretary, Vince Cable has
threatened to place a quota for female board members
of FTSE 100 companies, the proportion of females
at the most senior levels of large firms has stagnated.
Currently, they only make up 17.4% of the boards of
the FTSE 100 companies.
Back in March 2013, the Higher Education Careers
Services Unit (Hecsu) conducted research which
examined the take home pay of graduates who had
applied to university back in 2006. Again, a differential
emerged amongst the 17,000 graduates in the
sample, with male graduates taking home £24,000
and above and female graduates taking home
salaries in the region of £15,000 - £23,999. This
research considered graduates across all degree
subjects. This research is particularly concerning –
often economists suggest that the difference in pay
between males and females is a result of females
taking time out of the labour market to go onto
maternity leave. However, this research highlighted
significant pay differentials at the bottom end of the
graduate career ladder, before one can blame
maternity leave as a factor.
So, why do these differentials exist? Is it fair to
say it is simply discrimination?
Two articles in the Telegraph by Louisa Peacock are
worth citing. (1) She writes “I am at pains to write
this, but this (pay differential) can only mean one
thing. Women don’t value themselves as much as
men. Rather than women negotiating up their pay
(as the men clearly have done), women are not
willing/able to ask for more. They accept what’s
given to them. They are not valuing their skills as
much as men do” Sheryl Sandberg, the chief
operating officer of Facebook argues that women
stereotypes are holding women back in the labour
market. Peacock also suggests that women tend
to wait for opportunities to come to them on a plate,
whereas men will shout about their achievements
more and go and grab opportunities. Of course,
these are generalisations in themselves and there
is considerable evidence of discrimination in the
labour market – but, they are worth reflecting on.
(1) Consider reading two articles on the Telegraph, written
by Louisa Peacock. “Gender Pay Gap”, 7th March 2013 and
“How to solve the dreaded gender pay gap” published on
20th August 2013.
Women’s pay still less than men’s
Labour Market Economics teaches us that
wages are determined where the Marginal
Revenue Product equals the Marginal Cost.
In a perfect labour market all workers in a
particular profession or job would be paid
equally. But, the labour market is far from
perfect – some argue it is the most imperfect
market known. Therefore, differentials exist
and persist into the long run. One of the
most widely discussed differentials is that
between male and female earnings.
Another report has recently been published which
shows the differential between male and female
earnings. According to the Chartered Management
Institute survey based on 43,000 workers, male
managers’ earnings are rising faster than women’s
for the first time in five years. Men are more likely
than women to get a bonus, and when they do, they
get bonuses worth twice as much as their female
counterparts. According to the CMI survey the average
male management bonus equates to £6442 per
annum whilst the average female bonus is £3029.
At the most senior level of leadership, the average
director’s bonus is £36,270 for a woman and £63,700
for a man. Overall, these differentials equate to a pay
difference between male and female managers in
the region of £141,000 over the course of a whole
career.