Dynamics of the Wage Gap

Dynamics of the Wage Gap

Males vs. Females

Daniel Meharchand and Jasan Gakhal

ECON*3520

2016/03/18

Introduction

The wage gap between males and females has been a major talked about issue in Canada over the past one hundred years and continues to be a fundamental problem in today’s society. The purpose of this paper is to analyze the potential factors responsible for why this gap continues to exist through Canada’s Labour Force Survey and draw insight into the statistics which present relationships amongst wages and people. The sample population used in this report is from the dataset LFS 2008, it includes a sample size of 3002 individuals, 1698 male and 1304 female.

Over a century ago, gender inequality was so blatant that women were not even permitted to work for a wage. It was not until the second world war that women were presented with the opportunity to participate in the labour market in order fill the positions of their male counterparts who had left to fight overseas. This event led to the eventual growth of participation in the work force by women. As years went by, the gender pay equality became an issue. After the Pay Equity Act was enacted in 1990 (Pay Equity Commission, 2015), companies were not allowed to pay females a lower wage than a male for the same job based strictly on gender. The pay of males and females has been growing at a consistent rate but the wage gap still persists. Whether it is just a reflection of statistics, poorly implemented policy or poor productivity rate, the gender wage gap needs to be addressed by society.

Literature Survey 

It will be found that working men earn higher wages than working women and have a higher labour force participation rate than women. This continues to be true at the highest skill levels in the job market (Bjerk, D & Han, 2007). There are many factors that one may consider when analysing male and female labour force survey data to find why these gender inequality status quos remain true. Reasons may stem from levels of education attained, age, health and marital status. Moreover, the analysis performed regarding these factors  leads to the conclusion that lower wages and lower labour force participation for working women is still present today.

Many will argue that gender discrimination in the workplace is present only in third world nations and not in developed countries such as Canada or the United States. As these countries have legislatives rights that protect women's wages in the labour force through child care benefits, paid maternity leaves and general social protocols. Although some truth may be reflected in these policies, these legislative stimulants aimed towards women's wages actually contribute to the inequality in gender wages, even in these countries.

In many Scandinavian countries, full benefits are publicly provided and are heavily subsidised in the forms of long maternity leaves accompanied by full benefits. In addition to paid leave for mothers caring for sick children (Mandel H, & Semyonov M, 2005). Through this legislation, family role and work commitment conflicts are eliminated thus concluding that more women will enter labour force. Although this may have an initial positive effect on inequality towards women, there are also issues attached to these policies that lead to lower wages for women (Mukhopadhyay, U., & Chaudhuri, 2013).

As more incentive is provided for women to take time away from work through these activities mentioned, more women will choose to do so providing them with benefit in the short term. Although, unaware doing so will hinder them in the long term by eliminating much valued work experience as it has a direct correlation to wages (Arat-Koc, & Sedef, 2012). Though these incentives are still applicable to men, unfortunately, social protocol usually dictates that women are accountable for most of the house responsibilities such as cooking, cleaning, raising and caring for children.

Many variables are factors when considering wage determination for males and females. As equality between male and females wages is strived for amongst Canadian labour economists, it is interesting to see that presently this topic is quite often left off the agenda of political leaders. Perhaps it’s because many feel society in Canada has reached its limitation for gender wage equality. Or perhaps the gap is so small that the marginal difference is worth no dispute. Moreover, it is concluded that social protocol dictates the acceptance of lower female wages but not the lack of female participation in the labour force.  

Data Analysis

The Dataset

The dataset used in this paper is sourced from the Canadian Labour Force Survey for 2008. There are 3006 observations within the data set which allows for a more detailed analysis as trends can be identified. The variables used in this paper were chosen based on their relevance to the main argument which pertains to the male female wage gap. The variables used include; WAGE, EDU, AGE. The WAGE variable represents the hourly earnings of each individual observed in the labour force survey and is presented in a histogram with associated statistics (mean, median). Note: each variable was divided into male and female observations in order to proceed with the comparison between variables. Education (EDU) tells us the amount of years each individual has gained in education which is presented the same way as wage in regards to histograms and statistics. The AGE variable is utilized alongside the wage variable to perform a linear regression. The purpose of this regression is to illustrate how wages will vary with the increase in age of each individual. The computations and histograms were generated by the usage of the statistical program R. The male/female wage gap is discussed in the present section.

Wage Analysis

[pic 1]  [pic 2]

                                                    Males

Females

The first set of histograms discuss the wage distribution of people in the labour force (LFS 2008). On average, most men are earning wages around the $14 and $28 range while in contrast, women are earning wages around the $11.78 and $23.06 range. In reference to both genders, not as many people are making over $40 an hour as shown in the small bin on the histogram. In terms of both histograms, both are positively skewed. The skewness statistics informs us that people are making marginally higher wages than the average wage. Furthermore, this is indicated by analyzing the mean and median stats. When a data set is skewed to the right, the mean tends to be greater than the median as indicated by the calculation. This skewness is definitely good for both male and female workers because they are making a slightly higher wage than they would on average. However, as mentioned above, the data indicates that on average, men are making more than women. By comparing means, men make on average $22.38 versus women only making $18.48. Clearly there is a distinct issue in wage distribution amongst males and females that has to be further analyzed and be corrected in the future.