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17 January 2018

Over 63 per cent of the gender pay gap still unexplained

The Office for National Statistics (the ONS) has today published an analysis which uses regression techniques to provide more insight in to the factors which affect the gender pay gap.

Using the headline measure of gender pay gap, the ONS found the gender pay gap for full-time workers to be entirely in favour of men for all occupations. However, the smallest gender pay gaps are in areas that have almost equal employment shares between men and women.
The analysis found that 36.1 per cent of the gender pay gap could be explained by differences in characteristics included in the model, but that occupation has the largest effect since it explains 23.0 per cent of the differences between men’s and women’s log hourly pay.
This means that 63.9 per cent of the gap cannot be explained, and the ONS suggests that their analysis would benefit from information on family structures, education and career breaks; without these the unexplained element is over-stated. Factors such as the number of children, the age of children, whether parents have any caring responsibilities, the number of years spent in school and the highest level of qualification achieved are likely to improve the estimation of men’s and women’s pay structures and consequently decrease the unexplained element of the pay gap. The ONS says that because of the need for further analysis,  the unexplained element of the gender pay gap should not be interpreted as a measure of discriminatory behaviour, but they do go as far as to admit that it may play a part. Question: if a woman with children earns less than a man with children, to what should we ascribe the difference in earnings?  
When looking at age groups, the ONS analysis found that the gap for full-time workers remains small at younger ages. However, from 40 onwards the gender pay gap widens, reaching its peak between ages 50 to 59 for full-time workers.
Whilst 9.1 per cent of the difference can be explained by the difference in working patterns, men are more likely to work full-time, and full-time employees on average earn more. In other words, if women had the same returns to these characteristics as men and with all other factors held constant, women would still earn less on average than men because fewer women work in the highest-paying occupations and in full-time jobs.
Modelling the factors that influence pay, the results showed that while both men’s and women’s pay grow for most of their lives, overall, women’s pay grows less than men’s and also stops growing earlier than men’s pay.

You can find the analysis here

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