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25 August 2016

Children are not the cause of the gender pay gap

Perhaps not surprisingly, the Adam Smith Institute has chosen to interpret the recently released IFS Briefing Note on the Gender Pay Gap as showing that children are the cause of the gender pay gap. So, that’s all right then – we don’t need to do anything about it!

What the study actually shows is a correlation between the arrival of children and a widening of the gender pay gap. The study also finds a wage gap of over 10 per cent even before the arrival of the first child – an indicator that it is not children per se who cause the gap.

The study suggests that the gradual nature of the increase in the gender pay gap after the arrival of children may be related to the accumulation of labour market experience. It finds that by the time their first child is aged 20, women have on average been in paid work for four years less than men, comprising nine years less paid work at more than 20 hours a week and five years more paid work at less than half time. Here it is important to note the nature of the sample, for the study is based in part on the British Household Panel Survey which ran from 1991 to 2008 – will women who entered the labour market in the latter part of that period and who will enter it in future, spend as great a proportion of their working lives in part-time work, or will the improvements in both childcare provision and rights to flexible working make a difference?

I wonder too, how much human capital the people – both male and female – who remain in full-time work throughout their working lives actually do accumulate. I hope this is something that the IFS will explore. To give a couple of examples, a medic working for the NHS is likely to experience a quite considerable increase in human capital; a maintenance operative much less so. And what about the impact of people’s attitudes to work? Some want to gain more and more experience, others just want to do a job of work and go home at the end of the day. Can it really be the case that all of the people in the former category are men? Surely not?  The acquisition of human capital should not become another form of presenteeism; being at work in the workplace is not the only way of accumulating human capital, as the value placed on experience gained during a ‘gap year’ shows.

Seeing effect (the widening of the pay gap after the birth of a child) as cause (the birth of child causes the gap) is not helpful. As the IFS Study states, while inequalities in women are of direct interest in their own right, poverty is increasingly a problem of low pay rather than lack of employment, and what the study seeks to do is to understand the relationship between the gender pay gap and poverty.

The study is the first in a series – a fact which none of the extensive media coverage picked up on – and subsequent work in this research programme will estimate and economic model of the causal relationships between men’s and women’s wages and career patterns in order to some of the key causes of the gender wage gap, and hence to provide clear guidance to policy makers who seek to reduce it. In other words, the IFS has not yet identified the causes, and when it does, it will offer ways of closing the gap.

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