Exercises: The pay gap

Explain what the gender pay gap is and how it is calculated. How does it differ from direct pay discrimination (paying differently for the exact same role)?

In a company, the average salary for men is $\$2,000$ and for women, $\$1,800$.

1. a) Calculate the pay gap as a percentage of the average salary for men.
2. b) Interpret the result: how many fewer dollars does a woman earn for every $\$100$ earned by a man?

Distinguish between the pay gap, occupational segregation, and the glass ceiling, and give an example of each concept in any company.

What is unpaid care work (looking after children, elderly people, the home) and how is it shared today between men and women in most countries? Explain what effect taking it on has on the career of the person who does it, even if their contract is identical to someone else's.

The pay gap can be measured per hour, per month or per year. Explain why the result changes depending on the measure chosen: what happens to the annual gap if many women work part-time even though they earn the same per hour?

In a company, women earn an average of $\$19$ per hour and men, $\$22$ per hour.

1. a) Calculate the pay gap as a percentage of the men's average wage.
2. b) Interpret the result in a sentence anyone can understand.

Explain what shared responsibility in caregiving is (men and women sharing it in a balanced way) and reason what relationship it has with the pay gap: why is it hard to close the gap without shared responsibility?

What does the "motherhood penalty" consist of? Explain how the birth of a child can hold back a worker's pay and promotion (career breaks, reduced hours, prejudice) even if her salary is never officially cut.

Explain two common causes of the pay gap related to maternity and to the concentration of women in certain sectors, and explain why neither of them appears written in anyone's contract.

In a company, men and women in the same position receive the same base salary, but men receive many more "availability" supplements (being reachable outside working hours, accepting last-minute shift changes, etc.).

To analyze it, take these definitions into account:

• Gender pay gap: average difference between what men and women earn, normally expressed as a percentage of men's salary.

• Pay discrimination: difference in pay between men and women who perform work of equal value that is not explained by objective and justified reasons, but by reason of sex (direct if the rule or practice distinguishes by sex; indirect if an apparently neutral rule in fact harms one of the sexes).

1. a) Is there a gap? Is there discrimination? Analyze the case using the definitions above.

1. b) What would you review in a pay audit of that company?

The figure shows the average monthly salary of men and women across three sectors in an imaginary country.

1. a) Calculate the pay gap for each sector as a percentage and rank them from highest to lowest.
2. b) What hypotheses could explain why the gap varies so much from one sector to another?

Average monthly wages by sector in a fictitious country: health care, men $\$1,900$ and women $\$1,700$; education, $\$1,850$ and $\$1,800$; construction, $\$1,750$ and $\$1,600$.

1. a) Calculate the pay gap for each sector as a percentage.
2. b) Formulate a hypothesis for why the gap is smaller in education (union contracts with public, transparent pay scales) and test it with your reasoning.

In a fictitious country, $70\ \%$ of part-time contracts belong to women, and a good share of them do not choose those hours freely.

1. a) Explain how part-time work influences the annual pay gap even when the hourly wage is identical.
2. b) Propose two measures that reduce involuntary part-time work (child care services, the right to full-time hours, shared responsibility for caregiving) and explain how they work.

An internal audit discovers that, for the same role and seniority, the women in a company earn $4\ \%$ less in allowances and supplements.

1. a) What type of gap is this and why is it different from segregation by sector?
2. b) As the company's management, what would you do? As the U.S. Department of Labor (or the Equal Employment Opportunity Commission), what would you review? Reason both answers.

In one company, the workforce is half men and half women; among middle managers, $60\ \%$ are men, and in senior management, $80\ \%$.

1. a) Describe the pattern using the technical name it receives and explain why it is a "funnel".
2. b) Propose two possible causes (caregiving, promotion culture, informal networks) and one specific measure for each.

Some countries require minimum quotas of women on the boards of large companies.

1. a) Set out two arguments in favor (breaking the glass ceiling, the role-model effect) and two against (the risk of tokenism, the debate about merit).
2. b) What evidence would you ask for to know whether quotas work beyond the board (internal promotions, the company's pay gap)? Explain what you would expect to see.

A supermarket chain discovers a pay gap of $12\ \%$: women make up the majority of checkout staff, while men dominate logistics and store management.

1. a) Analyze the case by distinguishing between horizontal segregation and vertical segregation.
2. b) Propose a plan with three concrete measures and explain which indicator you would monitor to evaluate it.

Assess these three measures against the pay gap: publishing average salaries by gender in companies, equal and non-transferable paternity and maternity leave, and female quotas on boards of directors.

1. a) Explain the mechanism through which each measure would work.
2. b) Which one do you find most effective in the long term? Defend your choice.

"The pay gap is a statistical illusion: it disappears if you compare the same role and the same working hours."

1. a) Argue what truth there might be in this statement and what real phenomena it overlooks.
2. b) Explain why even the pay gap "explained" by hours or sectors can be an economic and social issue.

It is estimated that unpaid care work, valued at market prices, would be equivalent to a very significant share of GDP, and it is mostly done by women.

1. a) Explain what that estimate reveals about what GDP does not count and about who keeps the economy going.
2. b) Analyze, using cost-benefit criteria, a public policy of care services (child care centers, care for dependent people): what does it cost and what does it free up?

In many countries, the average pension of retired women is markedly lower than that of men.

1. a) Explain the chain connecting the pay gap and careers interrupted by care work to the pensions gap.
2. b) Propose two measures to reduce the pensions gap (care credits in Social Security contributions, shared leave) and analyze who pays for them and what effects they have.

"The gap exists because women freely choose worse-paid sectors."

1. a) Analyze what part of the truth the statement may hold and what it presupposes about how college majors and jobs are "chosen" (expectations, role models, stereotypes).
2. b) Turn the question around: why are heavily female-dominated sectors paid worse? Discuss the idea of the "social valuation" of care work compared with other jobs.
3. c) Conclude with your reasoned position.

One country equalizes paternity and maternity leave: the same number of weeks, compulsory and non-transferable for each parent.

1. a) Explain what incentive changes for a company when hiring a man or a woman aged $30$ (statistical discrimination).
2. b) Analyze possible side effects (difficulties in small firms, the birth rate) and how you would address them.
3. c) Why can this measure do more for the gap than an awareness campaign? Reason your answer.

You are asked to design the annual "equality index" of a company with $500$ employees.

1. a) Choose four indicators (pay gap, percentage of women in management, distribution of part-time work, leave or exits due to caregiving) and justify each one.
2. b) Explain how you would prevent the company from "fudging" the index (clear definitions, data broken down by job role, an external audit) and what you would make public and what you would not.

Unit challenge. Labor audit: an overview of inequality in your area. Imagine that you advise the economic council of your state to correct imbalances in the labor market. Your mission is to prepare an executive report with proposals based on empirical evidence.

1. Phase 1. Data search: Access the Bureau of Labor Statistics (BLS) website and collect the unemployment rate by sex for the latest quarter of the Current Population Survey (CPS) for your state, as well as the average annual earnings of men ($G_h$) and women ($G_m$) from the American Community Survey.

2. Phase 2. Quantitative analysis: Prepare a comparative table and calculate the percentage gender pay gap applying the formula $B = \frac{G_h - G_m}{G_h} \times 100$. Create a simple graph contrasting the male and female unemployment rates.

3. Phase 3. Findings and proposals: Write a report (maximum one page) analyzing the causes of the differences found (part-time work, occupational segregation, glass ceiling) and formulate two realistic active labor market policies to reduce them.

Evaluation criteria:

• Rigor in obtaining data from the BLS and accuracy in calculating the gender pay gap.

• Critical and reasoned connection between gender unemployment, wages, and labor market structure.

• Feasibility and economic justification of the proposed corrective measures.