The gender gap in pay progression: job mobility and job ladders

Lead Research Organisation: University of Essex
Department Name: Inst for Social and Economic Research

Abstract

The median gender pay gap has declined dramatically in the UK from 36.4% in the 1970 (O'Reilly, Smith et al. 2015) to around 18% in the most recent data (ONS 2018). Still, by international standards the pay gap is high: the UK has the fourth largest gender pay gap in the EU and the eighth largest of OECD countries (OECD 2019).
Researchers and policy makers have focused on gender differences in education and labour market experience as the likely drivers of the pay gap. However, today these explanations no longer stand up to scrutiny. Women are on average better educated than men and they are much less likely to withdraw from the labour market for long periods of time. Nevertheless, women earn on average about 10% less than men even when they work full-time and have similar education and labour market experience.
While explanations focusing on women's potential lower productivity as the cause of the gender pay gap have been thoroughly investigated and found inadequate, there is less evidence on the role played by employers. This research will contribute to addressing this gap.
The standard economic model of the labour market assumes that wages are determined by the market and that individual employers cannot choose the wages they offer to their employees. A different model assumes that for a variety of reasons competition is not perfect and employers have some discretion over the wages they offer. This wage setting power is likely to be weaker when workers are mobile. Mobile workers will leave an employer offering wages below the market rate. However, if workers are relatively immobile, employers can exploit this 'immobility' by offering them lower wages. If women are more constrained by family responsibilities in the types of jobs that they will take-up or in the amount of time and effort they can devote to job search, they will generally be more immobile and thus at a disadvantage. Women's family responsibilities might be ultimately responsible for the gender pay gap but not because they limit their productivity but rather because they reduce their bargaining power with firms.
This research project will examine the role of employer wage-setting power in driving the gender pay gap in two ways. First, using data from the UK's largest longitudinal study, it will investigate the extent to which job-to-job mobility patterns differ between men and women, and whether any differences can explain the observed gender gap in pay progression. Second, it will develop an index of employer wage-setting power based on geographical location, industry and cost of travel and test whether the index can explain gender differences in pay progression.
Tackling the gender pay gap is a widely shared goal among policy makers, political parties, women's groups, trade-unions and employer organizations. A better understanding of the factors driving the gap is essential to design effective policies. For example, in April 2017, the UK government has mandated large employers report annually on the pay gap in their organization. If women's lower productivity is to blame for the gender pay gap, such legislation is likely to be ineffective and even counterproductive. On the other hand, mandatory reporting is likely to be more effective if employers' stronger wage-setting power is a significant factor behind the pay gap. More generally, if employers enjoy significant wage setting power relative to some of their employees, this has implications for legislation on anti-discrimination, the minimum wage, trade-unions and family policy.

Planned Impact

Eliminating the gender pay gap is a goal endorsed by the Government, the trade unions, employer organizations, and all major political parties. It is also an objective of many women's charities and organizations supporting equality. The research programme we propose will contribute to a better understanding of the underlying mechanisms and processes that generate the gender pay gap. Our findings will be relevant for several categories of users:
1) Government agencies promoting anti-discrimination and equality
The Government Equalities Office and the Equality and Human Rights Commission are tasked with promoting equality and fairness in all areas of life. Both have an active interest in gender inequalities in the labour market. Our findings will provide evidence on the mechanisms and processes underpinning gender wage inequality and will help these bodies better understand the effect of various policies on the pay gap. Our findings will have direct implications for policies such as the minimum wage, trade-union legislation, antidiscrimination legislation, legislation on encouraging family friendly workplaces, subsidized childcare and maternity and paternity leave provision.
2) Governmental departments involved in economic decision-making
Women's lack of progression is not only a fairness issue but also one of economic efficiency. Closing the gender pay gap is expected to boost the economy and increase employment levels among women. Our findings will be of interest to policy makers in departments such as HMT and BEIS who are keen on increasing employment and productivity.
3) Trade unions
Trade unions strongly support closing the gender pay gap and have publicly lobbied the government to do more in this respect. They are also interested in understanding the structural causes that lead some workers to have more bargaining power than others. Our research will help them better understand what percentage of the gender pay gap can be explained by employer wage setting power and whether job mobility mediates any employer effects. Trade unions will also be interested in the implications of our findings for trade union legislation and other employment policies.
4) Women's charities and organizations promoting gender equality
Women's charities and other organizations promoting equality are invested in policies that advance gender equality. Our research will help them better understand why and how policies that are not specifically aimed at women such as minimum wage legislation or trade-union legislation affect the gender pay gap. They will also be interested in the links between job mobility and pay progression and whether helping women be more mobile is likely to help them obtain better pay.
5) HR Departments and professionals
By highlighting how women with family responsibilities may be disadvantaged in climbing the career ladder not by their lower productivity but by their lower bargaining power, our results will be useful to HR professionals and firm HR departments. They will also be interested in learning the extent to which women are prevented from being mobile by their family responsibilities and how firm policies may help in this respect.
6) Employer organizations
The CBI is publicly committed to supporting gender pay equality and to eliminating the gender pay gap. It (and other employer organizations) will be interested in knowing how they can support their members achieve these goals.
7) The general public
The gender pay gap is an issue of interest to the general public as demonstrated by the strong media focus on the results of the annual gender pay gap reporting mandated by the government in 2017. Findings from this research programme will help women and the general public better understand why women end up being paid less. They will highlight the role of factors other than individual productivity and in particular, the role of job mobility and family responsibilities in driving non-equal pay.
 
Description The project set out to examine the role of employer wage-setting power in driving the gender pay gap by examining job mobility patterns and by building a new gender sensitive measure of job opportunities. Key achievements of the project include:
a) Building a gender sensitive measure of job opportunities.
One of the most important outputs of the project is a new methodology that combines information about the spatial distribution of employment with information on commuting patterns to produce an indicator of job opportunities that accounts for commuting costs. We showed using this measure that women and in particular mothers find themselves in more concentrated labour markets due to the commuting constraints they face.
The measure we developed could potentially be used to examine other research questions related to commuting and labour market outcomes. Unfortunately, to date, we have not been able to gain ONS permission to release the new indicator we constructed. In the meantime, we have published the syntax used to generate it via the Re-Share service of the UKDS.
b) Examining how parenthood impacts men and women's job mobility patterns.
Previous UK research has found no significant gender differences in job mobility rates and hence concluded that mobility is not an important factor in explaining gender differences in pay. Unlike previous studies, we were able to account not only for quantitative differences but also for qualitative ones. We found that while overall mobility rates are similar, men and women move jobs for different reasons, and this has important wage consequences. While work related job moves carry significant wage premia, family related moves carry large wage penalties. Mothers were a third less likely to change jobs for work related reasons and almost twice as likely to change jobs for family related reasons compared to women without children. These mobility differences could explain about a third of the gap in wage growth between mothers and childless women.
c) Developing a new research agenda focusing on how differences bargaining power unrelated to productivity impact on pay inequality.
Work on this project has kickstarted a new agenda for the PI focusing on measuring and understanding the impact of bargaining power on labour market inequalities. The agenda builds on and extends work done in this project to look at other mechanisms through which bargaining power asymmetries are created such as job search behaviour, selection into self-employment and status discrimination in promotion and pay.
d) Network building and starting future collaborations.
The project included the organizing of a one-day academic workshop on gender inequalities in the labour market attended by several experts in the field, providing an opportunity to exchange ideas and explore the potential for future collaborations. Two of the attendees are currently working with the PI on developing a research program that will builds on the results of this project to further examine how bargaining power in the labour market affects wage inequality exploiting different data sets and using a variety of methods, including experiments and qualitative methods.
Exploitation Route Findings from this project make an important contribution to understanding why the gender pay gap persists despite women's strong integration into the labour market and significant anti-discrimination legislation. They show how motherhood creates significant barriers to career progression for women, preventing them from using the same career ladders as men. Fathers who take on significant care responsibilities also face significant barriers, suggesting that policy makers should concentrate on supporting all parents to combine work and family responsibilities. This includes facilitating access to high quality affordable childcare, but also other aspects such as transport infrastructure and reconsidering the organization of work. Parents are likely to disproportionately benefit from measures such a shorter working week or being allowed to regularly work from home.
Our findings speak to a variety of academics interested in gender wage differentials, and labour market inequalities more generally, including labour economists, sociologists, psychologists, geographers, and social policy scholars. The new index of job opportunities we produced can help examine other labour market inequalities.
By making clear that women still pay for parenthood with reduced labour market opportunities, the research will be of interest several Government Departments, professionals, charities, campaign organizations and ultimately to women themselves We continue to be engaged with these audiences, present our findings in the most relevant settings, and draw out the policy implications of our research.
Sectors Communities and Social Services/Policy

Government

Democracy and Justice

URL https://www.iser.essex.ac.uk/research/publications/working-papers/iser/2023-02
 
Description Our work on gender inequality has informed the 2023 Swedish Presidency of the European Union. We have significantly contributed to a European Institute for Gender Equality report on gender inequality and gender mainstreaming in the Covid-19 recovery (https://eige.europa.eu/publications-resources/publications/evidence-action-gender-equality-and-gender-mainstreaming-covid-19-recovery?language_content_entity=en) Throughout the project we have sought to engage both professionals and the public to showcase our results but also to draw out implications that were of interest to various non-academic stakeholders. We have done this by organising two policy events that were attended many representatives of charities, think-tanks, and campaigning organisations. We have also given talks in a variety of non-academic settings, to the Low-Pay Commission, OECD, the DWP, European Trade Unions Conference (ETUC), the European Commission, and a conference of tax experts. We have also produced a MiSoC explainer to make it easy for policy makers and other non-academic audiences to engage with our findings. Our Pint of Science talk in Colchester was well attended and feedback has been overwhelmingly positive. We have also produced a short (2 minute) animated video in collaboration with Science Animated and have very recently started a social media campaign to promote it. We have developed a new methodology to measure labour market concentration at the individual level, using small area information about employment and commuting patterns. Our approach will be useful to future studies that wish to examine labour market inequality beyond gender and as such will be of interest to other academics. The methodology is made available via the ReShare facility of the UK Data Service.
First Year Of Impact 2022
Sector Communities and Social Services/Policy,Government, Democracy and Justice
Impact Types Societal

Policy & public services

 
Description NCRM short course "Estimating treatment effects beyond the mean: quantile and distribution regressions" (Avram, November 2022)
Geographic Reach National 
Policy Influence Type Influenced training of practitioners or researchers
URL https://www.ncrm.ac.uk/training/show.php?article=12316
 
Description Presentation at the DWP Areas of Research Interest (ARIs) Workshop
Geographic Reach National 
Policy Influence Type Influenced training of practitioners or researchers
URL https://drive.google.com/file/d/1iDnYUD1Q8HvY9mw7AjUz9x5eYv9Z7b13/view
 
Description Provided evidence to the Office for Statistics Regulation (OSR) Review of the Labour Force Survey (LFS) transformation (May 2022)
Geographic Reach National 
Policy Influence Type Contribution to a national consultation/review
 
Description Gender equality and gender mainstreaming in the Covid-19 recovery
Amount € 300,000 (EUR)
Funding ID EIGE/2021/OPER/09 
Organisation European Institute for Gender Equality 
Sector Charity/Non Profit
Country Lithuania
Start 11/2021 
End 12/2022
 
Description 2nd Advisory Board meeting 
Form Of Engagement Activity A formal working group, expert panel or dialogue
Part Of Official Scheme? No
Geographic Reach International
Primary Audience Third sector organisations
Results and Impact Advisory Board meeting presenting results from ongoing research and well as plans for the immediate future to both academics and non-academic stakeholders.
Year(s) Of Engagement Activity 2022
 
Description Discussion with Joseph Rowntree Foundation about estimating deep poverty dynamics (Avram -Nov 2022) 
Form Of Engagement Activity A formal working group, expert panel or dialogue
Part Of Official Scheme? No
Geographic Reach National
Primary Audience Third sector organisations
Results and Impact Discussion with Katie Schmuecker and Isabel Taylor at the JRF on estimating deep poverty dyanimcs using Understanding Society, November 21st 2022.
Year(s) Of Engagement Activity 2022
 
Description Discussion with Joseph Rowntree Foundation on estimating care penalties (Avram-November 2022) 
Form Of Engagement Activity A formal working group, expert panel or dialogue
Part Of Official Scheme? No
Geographic Reach National
Primary Audience Third sector organisations
Results and Impact Discussion with Abby Jitendra, principal policy advisor at the Joseph Rowntree Foundation on estimating care penalties in the labour market.
Year(s) Of Engagement Activity 2022
 
Description EVENT-Advisory Board meeting 
Form Of Engagement Activity Participation in an activity, workshop or similar
Part Of Official Scheme? No
Geographic Reach National
Primary Audience Third sector organisations
Results and Impact Advisory Board meeting present project aims and proposes research plans for the coming year. In addition to four academics, the event was attended by representatives of the Government Equalities Office, Working Families, the Trade Union Congress, and the Return Hub.
Year(s) Of Engagement Activity 2021
 
Description Gender & Tax Systems panel discussant at "Sustainability & ESG in Taxation Summit (Avram -October 2022) 
Form Of Engagement Activity A formal working group, expert panel or dialogue
Part Of Official Scheme? No
Geographic Reach International
Primary Audience Industry/Business
Results and Impact Discussant in panel on Gender and Tax Systems organised as part of the "Sustainability & ESG in Taxation Summit", London, October 5th 2022. The event was targeted at industry and professional tax practitioners.
Year(s) Of Engagement Activity 2022
URL https://informaconnect.com/sustainability-and-esg-in-taxation/agenda/2/#gender-and-tax-systems_16-00
 
Description Gender Inequalities in the Labour Market Workshop (Avram) 
Form Of Engagement Activity Participation in an activity, workshop or similar
Part Of Official Scheme? No
Geographic Reach International
Primary Audience Other audiences
Results and Impact Organized workshop on Gender Inequalities in the Labour Market with an international audience.
Year(s) Of Engagement Activity 2022
URL https://www.eventbrite.co.uk/e/the-gender-gap-in-pay-progression-job-mobility-and-job-ladders-ticket...
 
Description Gender Inequalities in the Labour Market event (London, July 2023, Avram) 
Form Of Engagement Activity A talk or presentation
Part Of Official Scheme? No
Geographic Reach National
Primary Audience Third sector organisations
Results and Impact In-person event in London on Gender Inequalities in the Labour Market aimed at third sector organizations, campaigners, policy makers and practitioners.
Year(s) Of Engagement Activity 2023
URL https://www.eventbrite.co.uk/e/gender-inequalities-in-the-labour-market-tickets-642108823777
 
Description Invited internal talk at the Resolution Foundation (Avram, June 2022) 
Form Of Engagement Activity A talk or presentation
Part Of Official Scheme? No
Geographic Reach National
Primary Audience Third sector organisations
Results and Impact Given a talk on gender differences in job mobility and pay progression at the Resolution Foundation on June 9th 2022.
Year(s) Of Engagement Activity 2022
 
Description Invited talk to the European Trade Union Institute Conference (Avram, June 2022) 
Form Of Engagement Activity A talk or presentation
Part Of Official Scheme? No
Geographic Reach International
Primary Audience Third sector organisations
Results and Impact Gave a talk on the role of firms in shaping the gender pay gap to the panel on Increasing Wage Gaps Between Firms, as part of the ETUI-ETUC hybrid conference 'A blueprint for equality'
Year(s) Of Engagement Activity 2022
URL https://www.etui.org/events/blueprint-equality#session-id-333
 
Description MiSoC Explainer- Are women with families paying the price for a lack of mobility? (Avram, Harkness, Popova March 2022) 
Form Of Engagement Activity A magazine, newsletter or online publication
Part Of Official Scheme? No
Geographic Reach National
Primary Audience Policymakers/politicians
Results and Impact Brief explaining in non-technical terms results from our ongoing research on the gender pay gap. Aimed at non academic audiences, primarily policy makers and the media.
Year(s) Of Engagement Activity 2022
URL https://www.iser.essex.ac.uk/files/misoc/reports/explainers/Gender-pay-gap.pdf
 
Description Presentation at Low Pay Commission Research Workshop Thursday 28 April 2020 at 1.30-5.30pm 
Form Of Engagement Activity A talk or presentation
Part Of Official Scheme? No
Geographic Reach International
Primary Audience Policymakers/politicians
Results and Impact Presentation "Can a high minimum wage erase the gender pay gap among the low paid? The impact of the National Living Wage on Gender Pay Gaps in the UK."
to the Low Pay Commission Research Workshop Thursday 28 April 2020 at 1.30-5.30pm
Year(s) Of Engagement Activity 2022
 
Description Presentation at the Research Workshop organised by the Joint Research Center of the European Commission 
Form Of Engagement Activity Participation in an activity, workshop or similar
Part Of Official Scheme? No
Geographic Reach International
Primary Audience Professional Practitioners
Results and Impact Presented research findings on gender inequality in the UK at the research workshop organised by the Joint Research Centre of the European Commission on September 28-29 in Prague, Chechia.
The workshop had around 100 participants, including representatives of the Commission Directorates, such as DG EMPL, DG ECFIN, Eurostat (DG ESTAT).
Year(s) Of Engagement Activity 2022
URL https://euromod-web.jrc.ec.europa.eu/euromod-research-workshop-2022-programme
 
Description Talk at the OECD-EC Workshop of economic insecurity and income instability (Avram, June 2022) 
Form Of Engagement Activity A talk or presentation
Part Of Official Scheme? No
Geographic Reach International
Primary Audience Policymakers/politicians
Results and Impact Talk on income instability : measurement, data and policy related issues given to an internal OECD-EC Workshop;
Year(s) Of Engagement Activity 2022
 
Description Why can't we close the gender pay gap? -Policy Event, March 31st 2022 (Silvia Avram, Susan Harkness, Daria Popova ) 
Form Of Engagement Activity Participation in an activity, workshop or similar
Part Of Official Scheme? No
Geographic Reach National
Primary Audience Policymakers/politicians
Results and Impact Online policy event on the causes of the gender pay gap in the UK.
Year(s) Of Engagement Activity 2022
URL https://www.iser.essex.ac.uk/2022/02/10/why-can-t-we-close-the-gender-pay-gap-new-research-evidence-...
 
Description Why changing jobs affects mothers differently?-Short animated video (Avram, March 2023) 
Form Of Engagement Activity A broadcast e.g. TV/radio/film/podcast (other than news/press)
Part Of Official Scheme? No
Geographic Reach International
Primary Audience Public/other audiences
Results and Impact Short animated video explaining how mothers are less likely to change employers for career/pay related reasons and more likely to change for family reasons and how these different moves have very different wage consequences that accumulate over time. The video is using very simple and accessible language and imagery and is aimed at the general public.
Year(s) Of Engagement Activity 2023
URL https://www.youtube.com/watch?v=rWmtjnbIZbQ
 
Description Why do women (still) earn less than men? Pint of Science talk, Colchester 2022 (Avram, May 2022) 
Form Of Engagement Activity A talk or presentation
Part Of Official Scheme? No
Geographic Reach Local
Primary Audience Public/other audiences
Results and Impact Gave a talk on the gender earnings differentials as part of the Pint of Science 2022 festival in Colchester, May 9th 2022.
Year(s) Of Engagement Activity 2022
URL https://pintofscience.co.uk/event/lets-talk-about-that