Gender Pay Gap, Productivity Gap and Discrimination in Canadian Clothing Manufacturing in 1870
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Gender Pay Gap, Productivity Gap and Discrimination in Canadian Clothing Manufacturing in 1870 Catherine L. McDevitta, James R. Irwina and Kris Inwoodb a Department of Economics, Central Michigan University, Mt. Pleasant, MI 48858, USA. E-mail: [email protected] b Department of Economics, University of Guelph, Guelph, ON N1G 2W1, Canada
Women’s earnings were less than men’s in Canadian clothing factories in 1870. Orthodox neoclassical theory would explain that gender pay gap as a reflection of a gender productivity gap. Using classical hypothesis testing we reject that view, based on a large cross-section of 1870 census data. We find the gender pay gap was significantly larger than the gender productivity gap, much as Hellerstein et al. [1999] found for US manufacturing circa 1990. Our results are clear and compelling evidence of gender pay discrimination, contrary to the view that unregulated markets are efficient or fair. Eastern Economic Journal (2009) 35, 24–36. doi:10.1057/palgrave.eej.9050041 Keywords: gender pay gap; discrimination JEL: N31; J71; J31
‘‘Woman has won her way into the ranks of industry in every sphere of remunerative employment. It is therefore logical to inquire, What has been the benefit to her as a matter of pecuniary gain? What is her compensation? Is it fair and just? Is it equal to that paid to men for like services?’’ (Carroll D. Wright, ‘‘Why women are Paid Less than Men’’ [1892, p. 631]). Over a century later, the questions posed by Carroll D. Wright (first Commissioner of Labor of the US) are issues of continuing policy relevance and scholarly interest.1 The measurement, explanation, and interpretation of gender pay differences continue to excite research and debate.2 To frame the issue in the language of neoclassical economics: is the gender pay gap due to differences in the marginal productivity of women and men? or are women systematically exploited in labor markets?3 Answers to these questions are of critical importance in a world that increasingly looks to unregulated markets to organize production and distribution. So far, we have limited knowledge of the sources and meaning of the gender pay gap.4 Economic research on pay differences by gender (or race or other categories) has focused on wage regressions that are plagued by a lack of direct evidence on the productivity of workers.5 Discrimination is suspected if workers of different gender (or race, etc.) are paid differently when they have the same observed characteristics related to productivity. However, such pay differences could simply reflect unobserved differences in productivity that are correlated with gender (or race, etc.). Absent direct evidence on both pay and productivity, the interpretation of gender pay differences turns largely on beliefs about how well markets work, or on ideology more generally. A fairly small number of papers have sought to avoid the usual shortcomings of gender wage discrimination studies by incorporating measures of productivity in the
Catherine L. McDevitt et al. Gender Pay Gap
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