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How differences in job search drive the gender earnings gap

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Flexibility requirements by employers explain from a quarter to half of the remaining gender pay gap
Despite progress in recent decades, women on average still earn less than men. This discrepancy is partly because men and women often work in different jobs and sectors. For example, more men work as engineers and in manufacturing, while more women work as teachers and in service industries. However, even within the same job titles, women frequently earn less than men.

One potential factor contributing to the ongoing gender pay gap is the distinct job search behavior of men and women. This aspect, surprisingly underexplored until recently, is thoroughly examined in our latest research. We delve into how men and women search in the labor market, how they are selected by firms, and how these two dimensions are connected to the gender earnings gap.

The gender pay gap can be influenced by two critical stages in the recruitment process. First, women may be less likely to apply for high-paying positions compared to men. Second, women may have a lower chance of being selected at these positions, even if they apply. Interestingly, we find empirical support for gender disparities at the first stage, rather than the second. On the one hand, we find that women are less likely to apply at high-wage firms then men. On the other hand, we find that gender does not significantly impact the likelihood of being hired. Once applications are submitted, both men and women have approximately the same chance of being selected for the position. This finding indicates that the initial application phase, rather than the selection phase, plays a more crucial role in contributing to the gender pay gap within various occupations and sectors.

What's behind these patterns? We observe that there are certain job characteristics that go beyond job titles, which are particularly renumerated by firms and more frequently accepted by men than by women. Employers compensate employees with a higher wage for providing more employer-side flexibility. We observe distinctively different application patterns in terms of gender depending on these employer-side flexibility demands. On average, men apply more frequently for jobs with longer working hours and for jobs that require more overtime and short-term changes in the work schedule. The dominance of men in the pool of applicants is particularly present for jobs that require a lot of mobility, for example frequent business trips or changing work locations.

Our findings reveal that requirements for flexibility by employers could explain from a quarter to half of the remaining gender pay gap, varying according to the metrics used. Additionally, we discovered that mothers experience a significant decrease in wages in roles demanding high flexibility.

In light of our results, what strategies can be employed to narrow the earnings gap? HR managers can critically assess the need for stringent flexibility requirements. While certain roles, such as those in emergency medical services, naturally demand extensive and flexible hours, many other jobs could be adjusted to be more accommodating. Expanding access to improved and more flexible childcare solutions presents another crucial strategy, empowering more women to seek and secure higher-paying positions. Lastly, promoting a more equitable sharing of caregiving duties between men and women within households stands as a vital step towards closing the earnings gap.

© Benjamin Lochner and Christian Merkl

Benjamin Lochner is Senior Researcher at the Institute for Employment Research (IAB), post-doctoral Researcher at the Chair of Macroeconomics at the University of Erlangen-Nuernberg, and IZA Research Fellow
Christian Merkl is Professor at the Friedrich-Alexander-University Erlangen-Nuernberg, Research Professor at the Institute for Employment Research, and IZA Research Fellow

Please note:
We recognize that IZA World of Labor articles may prompt discussion and possibly controversy. Opinion pieces, such as the one above, capture ideas and debates concisely, and anchor them with real-world examples. Opinions stated here do not necessarily reflect those of the IZA.

Related IZA World of Labor content:

Employers and the gender wage gap by John Forth and Nikolaos Theodoropoulos
Eliminating discrimination in hiring isn’t enough by Mackenzie Alston
Equal pay legislation and the gender wage gap by Solomon W. Polachek

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