Chapter 7: Monitoring the effects of minimum wages

7.3 Effects on gender pay-gaps

Gender pay-gaps

One element of the overall level of total inequality lies in the wage gaps between different groups of workers, including between men and women. In order to close these wage gaps, it is important to understand why they exist.

Unadjusted or “raw” gender wage gaps refer to the earnings of men minus the earnings of women. This can be calculated for average wages, median wages or wages in different places in the distribution. The fact that women earn less than men is an almost universal feature of labour markets around the world. In many countries, the gap is higher among well-paid workers than among low-paid ones.

Much research has attempted to interpret the gender wage gap, and some of the factors that have been advanced by researchers include:
  • differences in levels of education and work experience
  • sex segregation channelling women into lower value-added sectors and occupations;
  • pay discrimination and the undervaluation of women’s work

Empirical evidence

Given the over-representation of women in low-paying jobs, minimum wages can also make a significant contribution towards lower gender pay gaps.

This link between minimum wages and reduced gender pay gaps has been documented in countries as diverse as the U.S. and Indonesia.1 An ILO study showed, for example, that the introduction in 2012 of a minimum wage in the former Yugoslav Republic of Macedonia may have contributed to reduce the gender pay gap between 2011 and 2014.

But maximizing the effect of minimum wages on gender pay gaps requires that the labour market institutions and wage policies do not themselves directly or indirectly discriminate against vulnerable groups of workers (e.g. by setting lower wage levels in sectors or occupations held by women or excluding migrants from coverage of minimum wage laws).

Also, because its causes are multiple, comprehensive policy packages are required to reduce gender wage gaps. National legislation must provide for the right to equal remuneration for work of equal value  and effective access to justice to claim this right. In addition, equal pay between men and women needs to be promoted through strong polices to promote gender equality, including combating gender-based stereotypes about women’s roles and aspirations, strengthening polices on maternity and paternity as well as parental leave, and advocacy for better sharing of family responsibilities.

Additional references:

1 For the U.S., see Di Nardo, J, Fortin, N., and T. Lemieux (1996), “Labor Market Institutions and the Distribution of Wages, 1973-1992: A semi-parametric approach”, Econometrica, 64(5). For the U.K., see M. Hallward-Driemeier, B. Rijkers, and Waxman A., 2015. “Can Minimum Wages Close the Gender Wage Gap? Evidence from Indonesia, Policy Research Working Paper 7364, World Bank Group.