Academic journal article Australian Journal of Labour Economics

Decomposing the Gender Pay Gap in the Australian Managerial Labour Market

Academic journal article Australian Journal of Labour Economics

Decomposing the Gender Pay Gap in the Australian Managerial Labour Market

Article excerpt

Abstract

This article1 examines the gender pay gap among full-time managers in Australia over the period 2001 to 2008. Using decompositions I explore the issue of discrimination, as well as the roles played by labour force experience and parenting. The results show that female managers earned on average about 27 per cent less than their male counterparts and the decompositions suggest that somewhere between 65 and 90 per cent of this earnings gap cannot be explained by recourse to a large range of demographic and labour market variables. A major part of the earnings gap is simply due to women managers being female. In addition, the presence of dependent children worsens the earnings gap, while the financial returns to labour force experience diminish in the latter years among female managers rather than stabilising, as they do for male managers. Despite the characteristics of male and female managers being remarkably similar, their earnings are very different, suggesting that discrimination plays an important role in this outcome. The article uses eight waves of HILDA data to fit mixed-effects models which are then used for Blinder-Oaxaca decompositions. In addition, a recent simulated change approach, developed by Olsen and Walby in the UK, is also implemented using this Australian data.

JEL Classification: J31, J70, J16

(ProQuest: ... denotes formulae omitted.)

1. Introduction

Until the early 1970s the gender pay gap2 in Australia was wide, and was kept that way by 'institutionalised gender wage discrimination', in the words of Paul Miller (1994, p. 371). The historic equal pay decisions of 1969, 1972 and 1974 ended this, and helped close the gap considerably (see, for example, Gregory and Duncan, 1981; and Borland, 1999). Nevertheless, a gender pay gap of considerable size has remained to this day. In his overview at the end of the 1990s, Borland summarised a number of studies covering the 1980s and 1990s which showed that the pay gap ranged from about 8 per cent to 25 per cent (Borland, 1999, p. 267). Borland observed that discrimination accounted for between 7 percentage points and 19 percentage points of the gap. He concluded that most of the reduction in the pay gap since the early 1970s was due to a 'decrease in wage discrimination' (Borland, 1999, p. 268).

The early equal pay cases did not fully pursue the labour market dimension of the gender pay gap, particularly occupational-based gender segregation. By the 1990s, this had become the focus for pay equity inquiries in which the concept of comparable worth was a central plank (Pocock, 1999). Using data from the late 1980s, Miller (1994) found a gender pay gap of about 13 per cent, with a large component of that gap (6 percentage points) due to occupational concentration. As Miller noted: 'about 40 per cent of the differential might be removed by the implementation of true comparable worth' (1994, p. 367). Using a comparable, but later data set, Wooden (1999) also examined the issue of comparable worth. While the actual pay gap was smaller in Wooden's study (11.5 per cent), his results were broadly similar to Miller's. Wooden found that occupational concentration accounted for 4.2 percentage points, that is, about one third of the gap (1999, p. 167).

However, Wooden argued that including the managerial workforce in such studies was unwarranted. When he removed managers from the sample, he found that the gender pay gap fell to 8.9 per cent, with the occupational concentration component now accounting for 3.6 percentage points. Wooden noted that the under- representation of women in senior management positions in Australian companies was likely to widen the gender pay gap, because managers earned much more than the all-occupational average. As a consequence, he concluded, this removed the scope for industrial tribunals to eliminate a considerable part of the gender pay gap because 'the earnings of managers typically lie outside the purview of industrial awards'. …

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