The gender pay gap is an issue of continuing concern and debate. There is a limited number of empirical studies, however, which have been concerned with understanding which factors reduce and drive gender differences in pay in Northern Ireland. This Working Paper seeks to fill this gap in the literature.
The gender pay gap is an issue of continuing concern and debate within policy and academic circles. There is a limited number of empirical studies, however, which have been concerned with understanding the gender pay gap in Northern Ireland. It is this gap in knowledge which this paper is concerned. This paper follows on from a previous paper which examined the unadjusted (raw) gender pay gap in Northern Ireland and the Republic of Ireland (Wilson, 2020). It seeks to examine and explain the nature of the gender pay gap in Northern Ireland and the extent to which different personal/family and job-related characteristics both drive and reduce differences in the earnings of males and females.
Using data from the Understanding Society survey for Northern Ireland, regression and decomposition methods are used to estimate the relative contributions of explained and unexplained components to the overall gender wage gap. That is, to estimate separately (a) the extent to which differences in characteristics and (b) differences in returns to those characteristics contribute to gendered differences in pay. The results show that the explained gender wage gap is negative, indicating that women have better labour market characteristics than men, on average. This has an overall reducing effect on the gender pay gap. In contrast, the unexplained gender wage gap is substantially higher in magnitude and has a widening effect on the gender pay gap.
The results show that lower overall average earnings of females is exclusively to be found in the unexplained component. However, it would be imprecise to say that this is evidence of a substantive ‘discrimination’ effect. Rather, the results mean that despite the fact that we have controlled for a range of individual and job-related characteristics, which actually advantage female earnings compared to males, the continuing differential (and higher) returns for these same characteristics which males obtain in the labour market, alongside other unobserved characteristics mean that males earn more than females. The analysis points to the importance of occupation and education. Structural differences in educational attainment and in occupational allocation between males and females have a reducing effect on the gender pay gap. At the same time, however, the differential and higher returns to males for these two same characteristics, are significant contributory factors, to females earning less than males.