The inequality in salaries between men and women

As far as remuneration goes, are there really inequalities between men and women?

Article also available in : English EN | français FR

First of all, the facts: a study [1] reveals that women earn on average 27% less than men in France.

Determination of Salaries

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An economist, who heard of this study, asked if the authors had compared comprable situations, that is to say, between men and women holding similar qualifications, having the same work experience, the same careers and who were in the same age group, etc. Some simple econometric techniques would allow us to answer these questions ( the techniques are explained in the successful book called "Freakonomics").

Our economist then went on to explain to us that, a priori, there is no reason why a company would discriminate according to the sex of its employees. So let’s attempt the perilous exercise of analysing the causes of this disparity in salaries between men and women.

Statistically, an international study revealed that girls are better in reading and writing, whilst boys are better in mathematics [2]. If each specialised in careers according to their supposed strengths, then girls are more likely to become historians, journalists or lawyers, whilst boys are more likely to become accountants or engineers. Well, these last two professions are, as a rule, better paid than the first two.

There could also be an element of self selection. In this way men would be more likely to choose arduous careers which call for long hours of work, but which have the potential to pay well, bankers, entrepreneurs. As for the women, they would tend to choose careers that are more interesting but less well paid, such as teachers, artists or writers

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It is completely possible that these choices simply reflect the preferential differences between men and women. Certain women therefore prefere careers which are better suited to motherhood and family life. Our data on marriage also explains how men could improve their chances on the marital market if they earned more money. Here is, without a doubt, the essential reason for the apparent disparities in salaries between the sexes : it is not the type of work in life as much as the different situations that women and men are faced with.

For example, when a woman stops working for two years to take maternity leave, she stands to lose two installements of a 5% annual salary increase. At the same time, women interrupt their careers: the difference in the activity rate between men and women is, as such, more marked in the 25 to 49 age group than in the 15 to 24 age group the representative difference of 13.3% and 7.4% according to INSEE (National Institue of Statistics and Economic Studies). This shows that it is the younger women who represent the larger proportion of working women than younger men in comparison with all the men active in the workplace. Well, one knows that salaries typically increase with age... the implication here is clear to see : even when the same career paths are available to both men and women, the choice of activity during the course of ones lifetime, can be a significant reason for the aveage salary differences between men and women.

But that is not all. Studies have also shown that women are, on aveage, slightly better than men in standardised testing, but that the performance of men is more variable than that of women. In other words, not only are there are more genius’ among men, but also many who are slower. Because the latter have a guaranteed minimum salary (such as the SMIC -minimum wage or various allowances) the distribution of salaries is only going to significantly reflect intrinsic abilities in the "right tail", that is to say, the right side of the distribution. In other words, the non geniuses, and the normal people receive a more or less similar salary whilst the most significant differences in salaries are more evident between relatively "normal" people and "genius’". As a result, even if women were, on average more competent than men, the fact that the abilities of men being more unequally distributed ensures that men on average earn more than women!

So much for the possible explanations on the disparity in salaries between men and women. Now what can we do about it? Basically, must one adopt certain principles like "there is no place for discrimination and it must be fought" or a set of privileges for women, such as a quota system which will give them an advantage? We accept that the first solution corresponds to the republican principle and should prevail. Unfortunately, we see that there is a tendancy to move in the other direction.

To fight the shortage of women in certain prestigious positions, Norway has put in place a quota system. The rule is the same for all listed companies: they must have at least 40% of women Managers and there is no allowance made for the fact that these companies may operate in a predominantly male environment. More generally, in a country where women represent less than 10% of managers, it is not always easy to fill positions with qualified people.

Ironically, male directors seem to be in favour of these measures. Why? Quite simply, because to impose a system of quotas, of whatever type, as a matter of course will not necessarily ensure that the most competent and qualified person will fill the position, but rather fill the criteria imposed by the quota. Present Directors - mainly men - do not find themselves directly threatened. But they know that the replacement will be chosen in such a way that is based neither on merit nor equality and that they will have to face these "pretenders to the throne" who, in general, with this quota system, are less qualified. In the same way, they are not often threatened themselves, but know that this could be restrictive for young, ambitious people who do not fill the quota criteria. These bad measures on which the quota system is based are put in place as they benefit in the end, the power already in place.

EE , Pierre Chaigneau , August 2011

Article also available in : English EN | français FR

P.S.

  • Quotas in companies is a bad idea according to this well written article from The Ecomnomist
  • Men make a big contribution to domestic chores, according to a new study

Footnotes

[1] released in october 2008, les écarts de salaire entre les hommes et les femmes en 2006

[2] Culture, Gender, and Math, may 2008, Science

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