Why has the gender wage gap narrowed?
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By Marie Drolet
The gap in pay between men and women can be examined in a number of different ways. Many studies focus on the earnings gap—the difference in the amount of pay received weekly or yearly. Yet men and women, on average, work a different number of hours in these periods. To account for the difference in working time, this study focuses on the wage gap—the difference in the amount of pay received per hour of work.
The gender gap in hourly wages narrowed by 7.6 percentage points between the late 1980s and the late 2000s. This study attributes the narrowing wage gap to three key factors.
First, the growth in women's relative wages outpaced that of men. This implies that the changing composition of the labour force and changes in how the labour market compensates workers played a role in narrowing gender wage gap.
Second, men and women entering today's labour market are more alike in terms of characteristics and wages than they were in the past. Thus as younger workers 'replace' older workers, the wage gap declines simply because the gap is smaller in the new cohorts than in those that preceded them.
Third, part of the decrease in the gender wage gap is related to the fact that men and women's wages did not diverge as they aged to the same extent as in the past.
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