A Danish study that investigated gender pay differences has revealed that the gender gap in wages is not on the brink of closing. Although the gap is partly due to the different employment characteristics of men and women, a significant proportion of the difference is not explainable by factors open to statistical inquiry. In the labour market as a whole, the difference in hourly earnings is 14.2% or 17.7% in favour of men depending on the choice of calculation method.
Debating and assessing gender pay gap again
As part of an investigation of the factors affecting the gender pay gap, the Danish National Centre for Social Research (SFI) recently published a report called ‘Differences in wages of women and men in 2007’ (Lønforskelle mellem kvinder og mænd i 2007). The analysis was conducted by SFI on behalf of the tripartite wage commission for the public sector (Lønkommissionen), which was set up in 2008 (DK0809011I) following the longest strike ever in the public sector (DK0804029I).
The trade unions had highlighted differences in wages between the public and private sectors as arising from ‘gender segregation’ in the labour market. The commission’s objective with this study was to:
Calculating gender pay differences: definitions effect results
The SFI/Lønkommissionen investigation of gender differences in wages applied a new method for calculating wage differentials (as agreed by Lønkommissionen) and so its results are not directly comparable to previous studies.
Relying on the Services Register of the Earnings Statistics produced by Statistics Denmark (Danmarks Statistik), the current study used two different concepts to determine hourly earnings:
- hourly earnings per performed working hour;
- calculated standard hourly earnings.
In the main, the first concept calculates hourly earnings as the total income (including income during periods of absence from work and payment for overtime work) relative to the number of hours actually spent working, whereas the second concept calculates a standard income (excluding absence and overtime payment) relative to the number of hours the employee is contracted to work.
As women are generally more likely to be absent from work (mainly due to a higher incidence of sickness in general and the gender imbalance in maternity and paternity leave), and as men overall are somewhat more inclined to work overtime, the different methods for calculating hourly earnings yield different results. (See DK0911039Q for data on absence from work; for data on overtime work, see the SFI study Danske lønmodtageres arbejdstid.)
Gender differences in wages still striking
The new study showed that gender pay differences remain in Denmark and are still striking .
Calculating the overall gender pay gap, it appears that in the labour market as a whole the difference between the hourly earnings of men and women is 14.2% or 17.7% in favour of men, depending on choice of calculation method. In the public sector, on the other hand, the gender pay difference is 15.4% or 20.2% (Figure 1).
Difficulty in explaining the gender pay gap
These methods of calculating the gender pay gap do not take into account the different employment characteristics of men and women. The study therefore looked at the relative importance of various factors that might explain gender pay differences. It calculated the share of the gender pay gap explained by educational level, labour market experience, sector of employment, occupation, form of payment and individual characteristics (family status and geography).
Overall, for the labour market as a whole these factors explain 58% or 69% (depending on the calculation method used) of the differences in the wages of men and women displayed in Figure 1. In the public sector, however, objective differences explain the gender pay gap almost totally if calculated as hourly earnings per performed working hours (97%) or more than four fifths (85%) if calculated as standard hourly earnings (Figure 2).
The degree to which gender pay differences are explained by factors open to statistical inquiry reflects – as it is often termed in Denmark (DK1002019I) – the gender segregated labour market. This segregation has both a horizontal and a vertical dimension. Thus, the study points out that the explainable observed gender difference in wages is mostly attributable, on the one hand, to the fact that men and women are employed in different sectors and occupations (horizontally), and on the other hand, that men and women are unequally distributed in managerial positions (vertically).
Rune Holm Christiansen and Helle Ourø Nielsen, Oxford Research
