June 10, 2023

On June 10^th, 1963, the Equal Pay Act was passed in the US, aiming to abolish wage disparity based on gender. Traditionally, researchers have been using the unadjusted median gender pay gap to compare the median pay of working women relative to that of men. However, this measure may not accurately reflect gender discrimination because it also captures pay differences caused by one’s age, education, occupation, industry, work experience, and discrimination (termed as ‘productive characteristics’). Alternatively, the adjusted gender pay gap provides a more like-for-like comparison by measuring the gender pay gap between people with the same productive characteristics.

In ‘Singapore’s adjusted gender pay gap’ (Singapore Ministry of Manpower, 2020), Ms Eileen Lin, Ms Grace Gan (both Ministry of Manpower), and Professor Jessica Pan (NUS Economics) reviewed the extent and trends in Singapore’s female participation in the labour market, with focus on the adjusted gender gap from 2002 to 2018. They found that the adjusted gender pay gap in Singapore narrowed in this period. However, the tendency for men and women to work in different occupations (occupation segregation) is still a key driver of the gender wage gap.

The study revealed that the 2018 cohorts of Singapore women have higher education and labour market participation compared to those in the past. The adjusted gender pay gap has narrowed from 8.8% in 2002 to 6.0% in 2018. In reaching this conclusion, the authors excluded pay differences that are explained by differences in productive characteristics between men and women. While human capital factors (one’s education and age) only modestly impact the gender pay gap, occupational differences of men and women are the major reason for the pay gap – there tend to be more men in better paid occupations.

In particular, while the share of women rose across broad occupational groups in the 16 years, many women remained in traditionally female occupations, such as nursing and teaching, and men were over-represented in higher-paying occupations. The authors argue that occupational segregation, alongside changes in income in favour of occupations with more men, had the biggest impact on the gender pay gap.

The authors also discuss potential factors causing occupation segregation in Singapore. First, some women may conform to traditional societal expectations of the appropriate role of women, thus opting out of competitive professional occupations and prioritising family. Second, personality traits associated with women (e.g., generally being more empathetic and risk-averse than men) and stronger interpersonal skills tend to land them in people-oriented occupations like teaching and human resources. Third, research indicates that women are more risk averse and less inclined to competition, which may drive them to choose safer and less competitive occupations.

After accounting for all these factors, the authors highlighted the remaining 6.0% gender pay gap not explained by identified productive characteristic differences. They postulate that this could reflect their model’s inability to capture factors such as individual job positions within each occupation, parenthood, and discrimination. Particularly, women’s major role in caregiving and parenting might be a key reason.

Read the report here: https://stats.mom.gov.sg/iMAS_PdfLibrary/mrsd-Singapores-Adjusted-Gender-Pay-Gap.pdf