Gender pay gaps in the European Union (EUROSTAT)

Abstract - The gender pay gap is a simple indicator, which is widely used to monitor gender inequalities in earnings. In unadjusted form, it measures the differences between the average earnings of men versus women. However, this indicator measures a concept broader than mere discrimination in the sense of "equal pay for work of equal value". Eurostat developed a methodology to decompose the gender pay gap into the part, which is caused by different characteristics of male and female employees, and the other component that stems from differences in financial returns for the same characteristics. After deducting the first part caused by men and women specializing in different jobs (‘segregation’), we obtain the "unexplained gender pay gap", which measures the remaining gap after adjusting for the average characteristics of male and female employees. With this decomposition, we could better identify the drivers of the gap, which would help policy makers addressing the reasons behind gender differences in pay. We also studied how the Gender Pay Gap adjustment affects the ranking of EU countries. Finally, we extended the analysis to other segregation effects in the labour market, in terms of employment rate and full/part time work, and propose to capture all of them through another complementary and synthetic indicator: the Gender Overall Earnings Gap.

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