Equal pay legislation and the gender wage gap

Summary

In "Equal pay legislation and the gender wage gap," S.W. Polachek (2019) investigates the persistent gender wage gap despite decades of equal pay legislation. The paper challenges the notion that discrimination alone is the primary driver of the wage disparity, proposing instead that differences largely stem from individual choices and human capital accumulation over a woman's life cycle. The methodology employed in this work primarily involves a synthesis of existing evidence and a theoretical application of the "life cycle human capital framework" to analyze patterns in gender wage gaps across various countries. Polachek critiques the effectiveness of anti-discrimination policies, citing that audit studies designed to detect discrimination often find little direct evidence, and impact studies on anti-discrimination laws show limited effect on reducing the gender wage gap. Instead, the analysis focuses on how demographic factors influence women's labor market participation and investment in human capital. The paper highlights that the gender wage gap is relatively small for young and single individuals but significantly widens with age and marital status, particularly for women with children. For instance, the gap for single, non-partnered men and women is considerably smaller (around 2.8% or 11%) than for married or cohabitating couples with children, where it can exceed 25% or even reach 47%. Each additional child is noted to increase earnings differences by 2% to 10%. This differential is attributed to women's reduced lifetime labor force participation and investment in job-specific training due to family responsibilities. The findings imply that traditional equal pay legislation, which often focuses on wage outcomes, may be missing its target because it doesn't adequately address the underlying behavioral and life-cycle choices influencing human capital investment. Consequently, the paper suggests that effective policies should focus on increasing women's continuous lifetime work. Recommendations include eradicating "marriage taxes" that disincentivize wives from working and promoting high-quality, affordable daycare options. Such measures would enhance women's incentives to invest in education and training, thereby enabling them to climb career ladders more effectively and ultimately narrowing the gender wage gap. The paper concludes that while the gender gap is already decreasing in many countries due to changing demographics and increased female labor force participation, targeted policies that support women's continuous career development can accelerate wage convergence.