Adjusted and Unadjusted Gender Pay Gap
It is important to differentiate between the unadjusted (also known as raw) wage gap and the adjusted (also known as discriminatory or unexplained) wage gap. The unadjusted or raw pay gap does not take into account differences in personal(e.g., age, education, the number of children, job tenure, occupation, and occupational crowding) and workplace characteristics (e.g., the economic sector and place of employment) between men and women. Parts of the raw pay gap can be attributed to the fact that women, for instance, tend to engage more often in part-time work and tend to work in lower paid industries. The remaining part of the raw wage gap that cannot be explained by variables that are thought to influence pay is then referred to as the adjusted gender pay gap and may be discriminatory.
A study commissioned by the United States Department of Labor, prepared by Consad Research Corp, asserts "There are observable differences in the attributes of men and women that account for most of the wage gap. Statistical analysis that includes those variables has produced results that collectively account for between 65.1 and 76.4 percent of a raw gender wage gap of 20.4 percent, and thereby leave an adjusted gender wage gap that is between 4.8 and 7.1 percent." Using a raw pay gap figure doesn't represent an accurate view of possible discrimination, according to Consad "the raw wage gap continues to be used in misleading ways to advance public policy agendas without fully explaining the reasons behind the gap".
However, a 2010 report by the European Foundation for the Improvement of Living and Working Conditions, for example, pointed out that "interpreting the adjusted gap as being the only discriminatory component falls short of the reality." The report found that the part of the pay gap which is attributed to observed differences in characteristics (such as age, education, hours worked etc.) may still reflect the outcome of discriminatory social processes. Eurofond found that "the major reasons for this gap are very often related to both horizontal and vertical segregation – or the fact that women tend to choose lower-paid professions, reach a ‘glass ceiling’ in their careers, or have their jobs valued less favourably. The origins of these factors could be judged as being discriminatory in themselves – that is, when they are rooted in gender stereotypes of male and female occupations."
Read more about this topic: Gender Pay Gap
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