CRA Insights

Labor & Employment Literature Watch: Pay equity and the gender pay gap

May 6, 2022
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Over the past few years, gender pay equity has become an increasingly prevalent topic in the news, popular culture, and politics. Take, for example, the case of women’s soccer; earlier this year, US Soccer and their female players reached settlement which included $24 million in back pay to current and former players.[1] Many states and localities have been adopting legislation to address gender pay equity in various ways. The Illinois Equal Pay Act of 2003 (IEPA), which prohibits employers from paying unequal wages to women or African-American employees performing the same or substantially similar work, was recently amended to require employers to proactively verify their compliance with pay equity laws.[2] Predictably, we have seen a large corresponding increase in the number of clients seeking economic analysis of pay equity on behalf of their clients, both large and small.

Economists have a long history of studying the gender pay gap, dating back to work in the 1960s by Jacob Mincer and Gary Becker when human capital theory was first established. Academic economists have both tracked the empirical gap between the earnings of men and women and expanded upon theoretical understandings of the mechanisms through which discrimination may play a part in labor market outcomes.[3] In this Labor & Employment Insights we will provide an update on where the literature surrounding pay equity and the gender pay gap is currently focused. Specifically, we will focus on the impacts of selection into jobs, gender differences in responding to sudden changes in the labor market, and COVID-19. 

[1] Das, Andrew. “U.S. Soccer and Women’s Players Agree to Settle Equal Pay Lawsuit.” The New York Times, February 22, 2022, https://www.nytimes.com/2022/02/22/sports/soccer/us-womens-soccer-equal-pay.html. Accessed April 26, 2022.

[2] Gurrieri, Vin. “5 Things To Know As Illinois Pay Transparency Law Kicks In.” Law360 Employment Authority, March 17, 2022, https://www.law360.com/employment-authority/articles/1474872. Accessed April 26, 2022.

[3] A foundational, though highly academic, overview of this research can be found in Cain, Glen G., 1986. “The economic analysis of labor market discrimination: A survey,” Handbook of Labor Economics, Volume I, in: O.Ashenfelter and R. Layard (ed.), Chapter 13, Elsevier.

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