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Gender differences in earnings over the lifecourse Heather Joshi, Centre for Longitudinal Studies, Institute of Education, University of London GeNet seminar.

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Presentation on theme: "Gender differences in earnings over the lifecourse Heather Joshi, Centre for Longitudinal Studies, Institute of Education, University of London GeNet seminar."— Presentation transcript:

1 Gender differences in earnings over the lifecourse Heather Joshi, Centre for Longitudinal Studies, Institute of Education, University of London GeNet seminar on Gender and Ageing Cambridge October 4 2005

2 Individual Incomes of men and women, by age 2003-4 Family Resources Survey

3 Differences between mens and womens incomes to be unpacked Vary by source Earnings, benefits, savings Differ by age Cohort and Lifecourse Differ by level of initial human capital Education ( here) This talk focuses on earnings, likely to affect pension and savings and particularly hourly pay as the driver of other differences, though itself affected by previous experience

4 Overview across cohorts Simulations of lifetime incomes, partly projected, up to retirement age cohorts entering the labour market in post-war Britain Averaged over 3 levels of education and three family sizes Men assumed to work continuous full-time Women to have interruptions and part-time work for children, and to be paid less on that account, and for a pure gender penalty

5 Cohort difference in relative earnings

6 VERY STYLIZED FACTS Women of the generation newly retired have only about one fifth the earnings record behind them of their male contemporaries Increased employment participation and higher relative wages projected to raise this proportion, but only to 62% by the time the 1970 cohort retires in 2035 Current and future women pensioners cannot rely on equal pay to produce equal pensions

7 Cohort differences in family and education: women now aged 35-85

8 Cohort effects: participation

9 Simulated relative lifetime earnings by cohort, children and education

10 Differentials with Cohort The higher labour labour force participation of the higher educated amplifies their higher pay to generate much higher lifetime income than less educated women, but still not as much as educated men Low educated women with large families particularly likely to face dependence on men and/or state

11 Within lifecourse developments How and when are these differences in earnings generated? Focus on hourly pay, though hours of work also then to fall over some parts of the lifecourse

12 Age profile in pay per hour Pay gaps between men and women increase as age increases. Cohort effect? Is this just because the older people missed out on Equal pay opportunities, or Lifecourse effect? Is there a widening pay gap over the lifecourse of a given cohort?

13 Age Profile of Relative Pay

14 Age and Cohort: New Earnings Survey

15 The Evolution of the Gender Pay Gap for Different Birth Cohorts Source: Manning and Swaffield (2005), from New Earnings Survey, includes part-timers

16 Gender Differences in Wage Growth: Source: Manning and Swaffield-M&S(2005) New Earnings Survey

17 Widening gender wage gap Faster growth for men at least early on Does it merely reflect divergence in experience on the labour market Or does the underlying degree of unequal treatment of also increase with age? M&S find that most of the growth in mens relative pay over 1st 10 years reflects unequal treatment. How does this tally with our findings?

18 Potential components of the pay gap Pre-entry discrimination Non-discriminated differences in education, training and work experience Unobserved systematic differences Compensating for different conditions Bargaining Power Labour market segmentation Job search Statistical discrimination Taste-based discrimination EXPLAINED BY DIFFERENCES IN HUMAN CAPITAL NOT ACCOUNTED FOR BY HUMAN CAPITAL

19 Some analyses of wage gaps, in terms of human capital

20 Sources for previous slide Cohort Studies: Joshi and Paci (1998). Sample contains workers of the specified ages only. Women and Employment Survey: Ermisch and Wright ( 1992). Sample of married women under 60 and their spouses. British Household Panel Study: Davies et al. (1997) Appendix 1 of Rake ed2000) Samples covers all working ages, and not just those with partners.

21 Findings on cohort members employed full-time, 1991-2000 Unequal treatment varies across individuals not necessarily systematically with the level of wages, Average unequal treatment fell from 16% to 12% during the 90s for women around the age of 30. But 32% of women aged 30 in 2000 were treated no better than if they had been paid at the rates received by the previous cohort. The position of women born in 1958 deteriorated between age 33 and 42. The index of unequal treatment increased from 12% to 21%.- more or less across the board. Makepeace et al (2004)

22 Relative hourly pay of women fulltimers over time for full- timers in the 1958 cohort, adjusted for human capital by quintile of original wage Source Makepeace et al 2004 using NCDS

23 Analysis of fulltimers in BCS70 and NCDS Source Makepeace et al 2004 using NCDS and BCS70

24 Wage ratios fitted for fulltime continuous worker in WOMU model Rake (ed) 2000

25 Validation? Rising profile for graduates not supported by M&S work on 11 years observations of BHPS Or the NCDS estimates for 33-42 Small nos of graduates in the 1994 BHPS Otherwise simulated pattern fits cohort estimates reasonably well Lifetime equality for highly educated likely to have been overestimated. More support for age than education differnences in gender premium

26 Estimated gender premia by age and education: BHPS 1994 and cohort studies Fitted ratio of female to male wages for hypothetical continuous full-time employee mid skill NCDS low skill NCDS high skill NCDS BCS, Makepeace et al BCS M&S BHPS Growth M&S 75% 80% 85% 90% 95% 100% 20253035404550 Age low skill bhps 1994 mid skill bhps 1994 mid skill NCDS low skill NCDS high skill NCDS BCS, Makepeace et al BCS M&S BHPS Growth M&S

27 Conclusions Gender penalites increase over the lifecourse even without taking into account interuptions, part-time hours and part-time pay For those who are already old this means a substantial legacy of unequal earnings For those who are young do not assume wage parity will be sustained even for women pursuing an uninterrupted career

28 Further Research Our project will use longitudinal data on pay and occupations to investigate the role of occupational mobility in the evolution of the relative fortunes of men and women as they get older. Our main evidence will come from the 1946, 1958 and 1970 birth cohorts Team members: Shirley Dex, Diana Kuh, Peter Dolton, Kelly Ward,Jenny Neuburger,

29 References Unequal Pay for Women and Men: Evidence from the British Birth Cohort Studies. Joshi and Paci MIT Press 1998 Gender earnings differentials over time, across and within cohorts: unequal pay among individuals in British Cohort Studies,1991 and 2000, Makepeace, Dolton and Joshi, International Journal of Manpower Aug 2004 Womens Lifetime Earnings. Rake (ed) Cabinet Office, 2000, Section 3.4, Appendix1 and Appendix 5 Gender and Pay: some more equal than others: H. Joshi in A Heath, J Ermisch and D Gallie (eds.) Understanding social Change. OUp for British Academy 2005Gender and Pay: some more equal than others The Gender Gap in Early Career Wage Growth, Alan Manning and Joanna Swaffield, LSE, May 2005 Evidence to House of Lords Select Committee on Economic Affairs: Economics of Ageing, Heather Joshi 2004

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