Robert Joyce is an associate director at the Institute for Fiscal Studies (IFS) and runs the Income, Work and Welfare sector. His main research interests are income distribution and the design and effects of the tax and benefit system. Robert is an editor of the annual IFS Green Budget.
On 5th February 2018 the Institute for Fiscal Studies published a report – “Wage progression and the gender wage gap: the causal impact of hours of work”. The new work funded by the Joseph Rowntree Foundation shows that one important factor is that mothers spend less time in paid work, and more time working part time, than do fathers, and as a result, they miss out on earnings growth associated with more experience. Robert co-authored the report alongside his colleagues Monica Costa Dias and Francesca Parodi.
Gender earnings gap biggest for highest educated
There has been a substantial fall in the gap between the earnings of lower-educated men and women over the last 25 years. However, there has been no fall at all in the gap for graduates. Traditionally, it has been lower-educated women whose wages were especially low relative to similarly educated men. It is now the highest educated women whose wages are the furthest behind their male counterparts – and this is particularly related to the fact that they lose out so badly from working part time.
In the early 1990s, average hourly wages were almost 30% lower for female employees than for male employees. The gender wage gap has come down, but it remains at around 20%.
There are lots of reasons for the scale and persistence of this gap, but new work, funded by the Joseph Rowntree Foundation and published by IFS, shows that one important factor is that mothers spend less time in paid work, and more time working part time, than do fathers. As a result, they miss out on earnings growth associated with more experience.
The effect of part time work in shutting down wage progression is especially striking. Whereas, in general, people in paid work see their pay rise year on year as they gain more experience, our new research shows that part time workers miss out on these gains. The vast majority of part time workers are women, especially mothers of young children.
This accounts for an important part of the gender wage gap. By the time a first child is grown up (aged 20), mothers earn about 30% less per hour, on average, than similarly educated fathers. About a quarter of that wage gap is explained by the higher propensity of the mothers to have been in part time rather than full time paid work while that child was growing up, and the consequent lack of wage progression. About a further tenth of that gap is explained by mothers’ higher propensity to have taken time out of the labour market altogether.
The lack of earnings growth in part time work has a particularly big impact for graduate women, because they are the women for whom continuing in full time paid work would have led to the most wage progression. For example, a graduate who has worked full time for seven years before having a child would, on average, see her hourly wage rise by a further 6% (over and above general wage inflation) as a result of continuing in full time work for another year, but would see none of that wage progression if she switched to part time work instead.
So, while it would be no panacea, there is scope for improved wage progression in part time work to play a significant role in closing the gender wage gap – especially among graduates.
Other findings from the study include:
- One reason for the fall in the gender wage gap since the early 1990s is that women in work are now better educated relative to men than they were. Indeed, women now earn less on average than men despite the fact that they are better educated on average.
- The gender wage gap has fallen quite a lot for the less well educated – from 28% to 18% for those with education just up to GCSE level. However, the wage gap has not fallen at all in the last 25 years for the highest-educated women. Female graduates still earn about 22% less per hour than male graduates.
- Even before they have children, women earn about 10% less than men. But that gap then increases rapidly for many women after they have children. Twenty years after the birth of their first child, a woman’s hourly wage will on average be a third lower than the hourly wage of a man with a similar level of education.
Read the full report here.