Higher Education Protects Women from Gender-based ‘Penalties’

Women typically earn 18%-20% less than men do with the same education, profession and personal characteristics, researchers from the Higher School of Economics found using data from an employment survey of young personnel. What’s more, this income gap has a cumulative effect, growing wider the longer a woman works. Education, however, significantly compensates for this ‘penalty’. College graduates experience less discrimination in terms of salaries. The income gap between genders is largely due to the division into ‘male’ (more highly paid) and ‘female’ occupations, and because women tend to choose less remunerative professions. However, the other reasons for this gender ‘penalty’ remain difficult to explain. IQ.HSE examined this issue with the help of a study by Margarita Kiryushina and Victor Rudakova.

A penalty for gender

‘My co-worker earns more than I do, but it’s not clear why’, Natalia R. (27), a systems analyst, told IQ.HSE. ‘We have exactly the same experience and job titles. I don’t seem to be worse than him in any way, yet my salary is lower’. ‘I asked management why Nikita got a raise even though we joined [the bank] at the same time and the same position. My boss laughed it off, saying something like, ‘You can’t sit at work for days at a time — you’re a girl’.

According to the study, women’s salaries amount to 70%-80% of men’s salaries — and this is a worldwide phenomenon. According to World Economic Forum data, women earn, on average, 68% as much as men. In Russia, that figure in 2017 was 71.7%, according to the Federal State Statistics Service. As of 2019, it ranged from 68.2% in the IT industry to 95.2% in the field of education. As of March of this year, according to the Russian Ministry of Economic Development, ‘the gap in wages between men and women’ was 72.1%.

The scientific literature offers many explanations for this gender ‘penalty’ in the labour market. First, segregation exists in the form of ‘male’ and ‘female’ educational programmes, professions and entire industries. Second, women and men ‘accumulate’ and ‘spend’ human capital (knowledge and skills) differently. Third, socio-cultural stereotypes persist — for example, the man should provide for the family’s financial needs and the woman focuses on the house and children and, therefore, is less interested in questions of career and salary. Fourth, with all other things being equal, employers continue to prefer hiring male employees.

 

There are also many subtle socio-psychological aspects. It is commonly held that women are less willing to take risks and are less competitive. They often have lower self-esteem, while men are more self-confident. ‘It is difficult for me to ask for a raise, I feel awkward, even though I feel that I’ve grown professionally’, noted our interlocutor, Natalia R. ‘A man can even have less education and still have more self-confidence. I see this in my co-workers who don’t have problems with self-esteem. And [a man] can also do better in his career, even if graduated from a less than top-notch university’. 

According to various studies, the psychological differences between men and women account for from 3% to 30% of the gender pay gap. ‘A lot really is done to make men more active and confident’, said chemical analyst Tatiana S. (30). ‘The conditions created for them only strengthen their sense of self. They are offered better positions, more interesting research’.

A separate question concerns when this gender gap is reflected in salaries. There is no consensus on this. In some cases, researchers identify the gap as soon as young employees start their careers, but others say it becomes apparent only after people have spent some time at their jobs. Thus, according to a British study, there is no difference between the salaries of graduates of different genders when they first enter the labour market, but a significant gap appears within 10 years. The situation is similar regarding the graduates of U.S. business schools, among whom a noticeable gender-based income gap can appear within from one to six years.

A study of 11 European countries found that in 2005, women earned on average 23% less than men did five years after graduation. That gap was wider in Catholic countries of Southern Europe and smaller in Protestant countries (the Netherlands, Sweden and Denmark). Moreover, the study left 38% of the differences in wages unexplained. Presumably, this was due to discrimination and segregation, as well as to sociocultural and other factors.

Women employees provide less ‘human capital’

Women workers are considered less efficient than men are and thought to gain competencies differently. The usual explanation is associated with traditionally female responsibilities such as household chores and caring for children and elderly relatives. Carrying out these duties can hinder women from accumulating human capital on a par with men. 

Maternity leave and sick leave for ailing children are seen as a ‘squandering’ of qualifications and as slowing the accumulation of human capital. The general belief is that women find it more difficult to return to work after maternity leave. Employees with children also have difficulty working overtime and going on business trips. Employers consider such personnel unprofitable and costly. As a result, companies often ‘fine’ employees with children by offering them lower salaries.

Various reasons account for the inequality (whether real or imagined) in the accumulation of human capital. These include:

 pre-market discrimination against women due to the prejudiced attitudes of college admissions boards and university professors;

 nuances in how families bring up their children (parents with traditional views of gender roles usually invest less in their daughters’ education);

 unequal access to education;

 differences in socio-economic status;

 differences in fields of activity.

The labour market is obviously segregated. Because there are ‘male’ and ‘female’ fields, women and men are represented unequally across sectors of the economy. Thus, education is traditionally a ‘female’ industry (not very high-paying, but offering advantages for the family in terms of work schedule), and oil production, IT, construction and engineering are ‘male’ fields (in which the work is more demanding but also betterr-paid).

Gender equality in the labour market and organisations remains a utopia, to some extent. But when it is present, it increases job satisfaction and, therefore, job performance for both men and women. According to one large recent study, three-fourths, or 76% of employees are happy with their jobs when they believe their company supports gender diversity.

One way or another, gender segregation persists. This is confirmed in an article by Margarita Kiryushina, a research assistant with the HSE International Laboratory for Institutional Analysis of Economic Reforms and Victor Rudakov, Assistant Professor of the HSE Faculty of Economic Sciences. They showed that segregation in specialised educational tracks and jobs according to sector was one of the main reasons for the gender gap in wages. Men work in higher-paying fields and women often start out by choosing educational programmes for less financially rewarding professions.

The higher education bonus

A paradox exists: women are paid less even though, on the whole, they are better educated than men are. In fact, Russia leads for the number of women receiving a higher education. According to Organisation for Economic Co-operation and Development (OECD) data from 2018, 63.5% of Russian women aged 25-64 hold university degrees. By comparison, the average among all OECD countries is 41% and for the G20 is 33.2%. At the same time, only one-half of Russian men hold university degrees.

Nevertheless, a gender gap in wages remains. Kiryushina and Rudakov studied it in detail as it applies to university and college graduates. The study gave particular emphasis to the role of education in gender inequality.

The study found that when controlling for the field of employment and educational and personal characteristics, women earn 18%-20% less than men do.

However, the results are differentiated for subsamples of people with different levels of education. Women employees with university degrees suffer the lowest gender-based ‘penalty, earning 18% less than men do with the same level of education. The situation is clearly worse in blue-collar occupations with basic vocational education (BVE), where the wage gap deepens to 25%. For mid-level specialists with secondary-level vocational education (SVE), that figure stands at 20%.

In other words, it is most advantageous for women to have a higher education because it reduces the gender-based ‘penalty’ in the labour market.

The study is based on data from the 2016 Federal Statistical Sample Survey of Graduate Employment. The subsample included respondents aged 18-30 with BVE, SVE or higher education. The study surveyed 28,735 individuals, 23,556 of whom were employed at the time. Men and women are represented equally in the sample.

The respondents averaged 25 years of age, with more than two-thirds living in cities. Almost two-thirds of women (64.5%) and one-half of men hold university degrees. The share of women and men with SVE is 26.8% and 30.4% respectively. The respondents had an average of 4.3 years of work experience and worked a 39.2-hour workweek on average, although men worked one hour more.

The distribution of specialisations was uneven among respondents: the ‘male’ professions required a higher education included engineering, manufacturing and construction, while such professions among women included education, business and law. The highest salaries were in the fishing, mining and construction industries.

The wage imbalance was assessed in stages. First, the researchers used descriptive statistics to identify the main patterns of gender differences in income. They grouped respondents according to education, labour market characteristics (industry and type of employment, region, work experience) as well as by individual data (age, marital status, etc.).

Next, they conducted a regression analysis, building a logarithmic equation of wages according to educational level and workplace and personal characteristics. The researchers used three models, accounting for different variables.

It turned out that all three regression models pointed to a ‘significant and persistent “penalty” for female graduates of educational institutions in the Russian labour market’.

Researchers then used the decomposition method, dividing gender differences in salaries between the categories of ‘explained’ and ‘unexplained’. The first is associated with differences in observed characteristics (length of employment, educational level, etc.). The second is linked to ‘non-obvious’ parameters that are usually discriminatory, such as when men and women in the same position earn different salaries. ‘Formally, we are all equal’, noted Natalia R., who spoke to IQ.HSE. ‘But managers rely more on male employees and encourage them more’.

‘Penalties’, preferences and restrictions

According to the study, the gender pay gap varies by specialisation and occupational field. As already mentioned, the level of education is very important: the more women have, the less they fall behind men in terms of salaries. However, respondents’ marital status was also important.

It turned out that unmarried women hold jobs more often than married women do. The reverse is true for men, who more often hold jobs when they are married.

Married men earn a ‘salary bonus’ of 7%, whereas employers ‘penalise’ women for having families. What’s more, researchers calculated that each subsequent child ‘affects a woman’s salary negatively, reducing it by 5%’. Households might compensate for these multi-directional trends themselves, with men earning more as their wives’ incomes fall.

In addition, employers always prefer employees of a certain type and are ready to pay them more and help them advance in their careers. They also have their ‘least favourite’ staff members. Married female employees are a striking example of this. ‘They didn’t include me in a major project. They said that since I had a small child, I wouldn’t take part in the work properly’, complained chemist Tatiana S.

Metaphors such as ‘glass ceiling’, ‘sticky floor’ and ‘glass walls’ are used when describing discrimination against women. They all refer to the barriers to career growth and horizontal mobility that women face. ‘Everything was looking like they would name me lab director, but they didn’t give it to me’, said Tatiana S.

Often, women are simply pushed out of high-paying industries. ‘Before she took maternity leave, my manager held a fairly high position’, said bank employee Elizaveta M. ‘But when she returned, they waved her off, as if to say, “Get out of top management: business is no place for mommies”’.

At the same time, income inequality between men and women can have a cumulative effect; it increases the longer a person is on the job. ‘Every year of work experience gives men a more substantial increase in salary than women’, the researchers pointed out. ‘This means that the longer they work, the greater the wage gap between men and women, all other things being equal’. In fact, this was also shown by another study, the Russian Longitudinal Monitoring Survey based on HSE data.

Kiryushina and Rudakov calculated that men’s salaries increase 11% annually, as compared to 7% for women. Women employees’ work experience is ‘monetised’ less. One explanation for this is gender discrimination: women receive promotions less often and so their salaries do not increase as quickly. 

‘Non-capitalised’ specialities

Men and women receive different benefits from their education and training. For example, men who have completed their studies in engineering fields earn 16% more than men with only SVE in the same field, and women earn only 12% more. Even in so-called ‘women’s’ professions such as the service sector, men with a corresponding education earn 13.3% more, whereas the increase for women is a slightly lower 12.7%. 

The ‘penalties’ that women suffer vary greatly by industry. Thus, gender differences in salaries are smaller in the service sector, education, healthcare and the natural sciences. For example, the disparity totals 14% in the natural sciences and mathematics.

But there are also fields where that ‘penalty’ is very high, such as the social sciences, where women’s and men’s salaries differ by 31%.

An analysis of the role that the length of the workweek played in salaries showed that a 10% longer workweek resulted in 3.8% higher wages for men, but 1.8% higher for women. The male-female income ratio also differs by region. In all regions, women earn less than men do, but that gap is larger in some regions than in others, with the smallest differences in the Central and Urals federal districts and the largest in the North Caucasus and Volga regions.

Possible reasons for the variations are differences in the value of the higher education prevalent among women and in the perception of a woman’s place in society that is typical in largely rural regions (in the spirit of ‘the man is the breadwinner of the family’). Previous studies have found that the highest gender contrasts are in low-wage jobs. Thus, the gender wage gap is larger among graduates who have just entered the labour market in less urbanised areas than among young workers in the big cities.

Closing the gap

One important finding of the study is that a person’s salary is still highly dependent on their area of study — that is, on the choice they make in the upper grades. But that choice can be influenced by the applicant’s expectations (regarding salaries in a particular profession), cultural attitudes, social norms, etc. As everyone knows, the family also plays a major role. As a result, education and parental attitudes can block social lifts for children by forcing them to choose the ‘wrong’ area of specialisation.

Naturally, one of the ways of overcoming the wage gap is through profiling. Margarita Kiryushina and Victor Rudakov point out that women need to be more widely encouraged to pursue those fields that bring the greatest returns on the labour market and offer more highly-paid positions.

Men and women are gradually being profiled in different industries. This is closely related to the translation of gender stereotypes in the course of education — for example, through the attitude of teachers and communication with fellow students. It is important for students to understand, in one way or another, that their success in a particular speciality does not depend on gender.

Young women could be encouraged to pursue STEM (Science, Technology, Engineering and Mathematics) studies with the help of special academic Olympics, workshops, scholarships and grants. But social assistance in the form of maternity support is no less important. When a woman is confident that she can combine work with raising a child, she feels more freedom in her choice of profession. She would not feel the constraints and limitations concerning ‘men’s’ and ‘women’s’ fields of work. This, in turn, would probably reduce discrimination.
IQ

Author: Olga Sobolevskaya, October 07, 2021