Why do women still earn less? Analysing high-paying jobs

Why do women continue to earn less money than men – approximately 20% less, according to some estimates – and what can be done about it?

At least half the pay gap reflects the fact that women tend to work in different kinds of occupations and industries than men, a phenomenon known as “gender segregation”. Understanding the causes of that gender segregation is a key part of any attempt to address the pay differential.

Wharton management professor Matthew Bidwell and Roxana Barbulescu, a management professor at McGill University in Montreal, set out to understand the causes of gender segregation by taking a different approach than studies that typically look at variances in the kinds of jobs that men and women choose, or at the decisions made by employers during the job application process.

Bidwell and Barbulescu opted instead to look at job applicants themselves to determine whether the decisions they make during their job search process have a significant impact on which offer they accept. Their results are presented in a paper titled, Do Women Choose Different Jobs from Men? Mechanisms of Application Segregation in the Market for Managerial Workers, forthcoming in the journal Organization Science.

“Much of the debate over earnings has focused on the idea that there are barriers to women getting certain kinds of jobs, and that a big part of this is due to subtle and not so subtle discrimination on the part of employers,” says Bidwell. “But most of the available data looks at the jobs women end up in, which reflects a series of decisions by both the employee and employer.” The challenge was to separate out data that deal primarily with how women view the employment landscape even before starting the job application process. Do those views, for example, lead women to systematically choose different, and lower-paying, occupations than their male counterparts?

The survey

The two researchers analysed data on 1,255 men and women entering the job market as they were graduating from a large, elite, one-year international MBA program. Such a group is far from representative of the population at large. However, “studying MBA students is particularly valuable for exploring segregation into some of the best-paid and most influential jobs in society, which are the kinds of jobs in which women have traditionally been under-represented,” the authors note in the paper.

Barbulescu surveyed the students about their job interests at the beginning of the MBA program, and then again at the end in order to find out what kinds of jobs they applied for, where they got offers and what jobs they ultimately accepted.

The researchers’ main finding was that women were significantly less likely to apply to Wall Street-type finance jobs, somewhat less likely to apply to consulting jobs, and more likely to apply to jobs in general management, most notably internal finance and marketing. Not coincidentally, the finance and consulting jobs that women avoided were also the ones that were most highly paid.

No surprises there, but the researchers dug deeper to see what might explain these results. To start, they broke down the different influences on job search decisions into three different factors: applicants’ preferences for specific rewards from their jobs, such as money or flexibility; the ability of applicants to identify with particular kinds of jobs, which often reflects how compatible those jobs are with other ways the applicants see themselves; and the applicants’ expectations that an application could succeed.