Transcript Fig 1 The Earnings-Experience Profile for Men and Women

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
Individual Incomes of men and
women, by age 2003-4
Family Resources Survey
Differences between men’s and
women’s 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
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
Cohort difference in relative
earnings
Lifetime earnings: ratio of women to men
by year of birth
70%
62%
womn/men approx
60%
50%
39%
40%
30%
21%
20%
10%
0%
1940
1955
YEAR OF BIRTH
1970
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
Cohort differences in family and
education: women now aged 35-85
100
90
Ever Married
At least one child
80
No qualifications:
Women
70
%
60
50
No
qualifications:Men
40
30
Ever Divorced by
50
20
10
Higher Quals Men
Higher Quals:
Women
0
1910
1922
1934
1946
year of birth (approx)
1958
1970
Cohort effects: participation
Years between first birth and next job at the median
16
14
14
13
12
13
12
years
10
10
9
8
8
6
All
No qualifications
Higher qualifications
6
5
4
4
2
2
0
0
1
0
1958
1970
1910
1922
1934
1946
mother's year of birth
Simulated relative lifetime earnings
by cohort, children and education
100%
,No Quals
90%
Mid quals
High quals
80%
70%
60%
50%
40%
30%
20%
10%
0%
e
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0
2
4
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2
ds
i
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0
ds
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R
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es
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15
0
2
4
ds
i
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2
ds
i
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0
ds
i
k
R
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35
0
2
4
ds
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2
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0
ds
i
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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
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
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?
Age Profile of Relative Pay
Hourly Earnings Women relative to men: NES cross sections
1976
110%
1986
100%
1996
90%
2000
80%
70%
60%
50%
<18
18-20
21-24
25-29
30-39
40-49
50-59
60-64
Age and Cohort: New Earnings
Survey
Relative hourly earings of men and
women full-timers, by age and cohort
1
late 70s
0.9
early 70s
0.8
late 60s
early 60s
0.7
early 50s
0.6
early 40s
early 30s
0.5
early 20s
21-24 25-29 30-39 40-49 50-59 60-64
The Evolution of the Gender Pay Gap for Different Birth Cohorts
Source: Manning and Swaffield (2005), from New Earnings Survey, includes part-timers
Gender Differences in Wage Growth:
Source: Manning and Swaffield-’M&S’(2005) New Earnings Survey
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 men’s
relative pay over 1st 10 years reflects
unequal treatment. How does this tally
with our findings?
Potential components of the pay gap
EXPLAINED BY
DIFFERENCES IN
HUMAN CAPITAL
Taste-based
Pre-entry
discrimination discrimination
Statistical
discrimination
Non-discriminated
differences in
education, training
and work
experience
Labour market
segmentation
Job search
Unobserved
systematic
differences
Bargaining
Power
NOT ACCOUNTED
FOR BY HUMAN
CAPITAL
Compensating
for different
conditions
Some analyses of wage gaps, in
terms of human capital
Sources of gender wage gap, selected
women ft-pt:
analyses 1978 to 1994
human capital
0.60
women ft-pt:
0.50
remuneration
log wage gap
0.40
0.30
men-women,
full-time:
0.20
human capital
0.10
men-women
0.00
age 32
1978
age 33
married
1991
1980
partnered
all
1994
1994
fulltime:
remuneration
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.
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)
ration of women's pay to men's post adjustment
Relative hourly pay of women fulltimers over time for fulltimers in the 1958 cohort , adjusted for human capital by
quintile of original wage
88
Top
Second
Middle
Fourth
Bottom
86
84
82
80
78
76
74
72
Aged 33 in 1991
Source Makepeace et al 2004 using NCDS
Aged 42 in 2000
Analysis of fulltimers in BCS70 and
NCDS
Mean of index of unequal treatment by earnings quintile
25
percent
20
15
BCS 2000
10
NCDS 1991
5
NCDS 2000
0
Bottom
Second
Middle
Fourth
Top
earnings quintile
Source Makepeace et al 2004 using NCDS and BCS70
Wage ratios fitted for fulltime
continuous worker in WOMU model
Fitted ratios of women's to mens' hourly wages, full-timers with
uninterrupted employment: based on 1994 BHPS
female as % male
100%
90%
low skill
mid skill
high skill
80%
70%
18
28
38
48
Age
58
Rake (ed) 2000
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
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
low skill bhps 1994
100%
95%
mid skill bhps 1994
mid skill NCDS
low skill NCDS
high skill NCDS
BCS, Makepeace et al
BCS M&S
BHPS Growth M&S
high skill NCDS
BHPS Growth M&S
BCS M&S
90%
low skill NCDS
BCS, Makepeace et al
85%
low skill NCDS
high skill NCDS
mid skill NCDS
mid skill NCDS
BHPS Growth M&S
80%
75%
20
25
30
35
Age
40
45
50
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
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,
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
•
Women’s 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 2005
•
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