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Gender Pay Gap: Study Reveals Why Women Earn Less

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Guy Bentley Research Associate, Reason Foundation

New research suggests women earn less than men because they opt for jobs with more flexibility but less pay.

From the White House to feminist lobby groups, a chorus of voices claims the gender pay gap is due to rampant sexism in the workplace, with women earning just 78 cents on the dollar to what men earn.

This figure is a statistical sleight of hand. The 78 cents figure, or anything like it, can only be reached by adding up all the money men earn and all the money women earn, and looking at who is earning more on average.

The figure doesn’t represent women earning less than men working the same jobs, the same hours, in the same roles. Nevertheless, the Obama administration is proposing costly rules that mandate companies with 100 employees or more to include more information on annual reports of employees’ pay and sex.

But a new study by Matthew Wiswall and Basit Zafar suggests pay differences between the genders have a lot to do with the different choices men and women make about the life-work balance.

The authors surveyed college students over several years to find out how much they valued different job attributes like pay, flexibility, part-time options, job stability and pay growth. (RELATED: Global Study Finds Gender Wage Gap Close To Zero)

The study found on average students are willing to give up 2.8 percent of annual earnings for jobs with a percentage point lower chance of getting fired. Students said they would give up a little over five percent of their pay for a job that has the option of working part-time hours.

There were sharp divisions between the genders. Women were willing to give up 7.3 percent of their pay for more flexible hours compared to just one percent for men. Women also said they would opt for lower earnings to the tune of four percent for more job security, compared to 0.6 percent for men. (RELATED: Equal Pay Day Revisited: Why The Gender Pay Gap Is Still A Myth)

Men put a much bigger premium on earnings growth, saying they would trade off 3.4 percent of their pay to get a job where wage growth is faster.

“While there is substantial heterogeneity in preferences, we find that women, on average, have a higher willingness to pay for jobs with greater work flexibility (lower hours, and part-time option availability) and job stability (lower risk of job loss), while men have a higher willingness to pay for jobs with higher earnings growth,” say the study’s authors.

The researchers also found these students’ post-college jobs closely matched their preferences. In other words, a large part of differences in pay between the genders are a result of the active choices men and women make rather than sexism.

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