The Gender Pay Gap: Measuring and Explaining It

What the gender pay gap measures, why it exists, and what Nobel prize-winning research by Claudia Goldin found about its causes.

In almost every country, women on average earn less than men. This difference is called the gender pay gap. Understanding what it measures, and what causes it, is one of the most studied questions in labour economics.

Raw and adjusted gaps

The raw gap compares the average or median earnings of all working women with all working men. The OECD reports that across its member countries, the median full-time woman earns roughly 10 to 12 percent less than the median full-time man, with large differences between countries.

The adjusted gap compares men and women with similar jobs, hours, education and experience. It is smaller, because part of the raw gap comes from differences in occupations and hours. But it rarely disappears completely.

What causes the gap?

In 2023, Claudia Goldin won the Nobel prize in economics for her research on women’s work and pay. Her work found that much of today’s gap in rich countries is not about women being paid less for the same job on the same day. Instead, it emerges over time, especially after having children.

Goldin highlighted what she called greedy jobs: roles in fields like law, finance and consulting that pay disproportionately more for long, unpredictable hours. When a couple has children, someone usually needs a more flexible job. Because of social norms and existing earnings differences, it is most often the mother who steps back. The gap then widens year after year.

Other factors include occupational segregation, with female-dominated jobs often paying less, and discrimination, which studies using matched job applications continue to detect.

Two lawyers, one child

Two lawyers graduate together earning the same salary. After they marry and have a child, one takes a role with regular hours at a smaller firm, while the other stays in a demanding job with late nights. Ten years later, the second earns far more. Neither was paid less for the same work, yet a large gap has opened, and it often follows gender lines.

Thinking the gap is only about equal pay for equal work

Laws requiring equal pay for equal work matter, but they cannot close the whole gap, because much of it comes from differences in hours, flexibility and career paths after children. Goldin's work suggests that making well-paid jobs more flexible could matter as much as anti-discrimination rules.

Key takeaways

The raw pay gap compares all working women and men; the adjusted gap compares similar workers.
Claudia Goldin won the 2023 Nobel prize for research on women's work and pay.
Much of the modern gap grows after children, linked to jobs that reward long, inflexible hours.
Occupational segregation and discrimination also contribute to the gap.