Giving Compass' Take:

• Brookings explores the reasons for the gender pay gap across many institutions and finds that how firms report the disparities matters. 

• How transparent are organizations you are involved with? How can funders help to improve equal pay reporting? 

• For more context, here's what the pay gap looks like worldwide.

That women are paid less than men for the same job is unacceptable. Yet, as countries name and shame firms to tackle pay disparity, some caution is necessary. Firms are not countries, and equality within firms may imply little equality in the economy. For instance, contracting out low-paid jobs where female workers happen to be a majority (nurses versus doctors) will enhance pay equality for the remaining workers within the firm. But that would not tackle the root causes — we need more male nurses and female doctors. For the World Bank Group’s most ambitious look at how it pays its staff, we developed a new methodology that decomposes what looks like a large pay gap at the institution, highlighting the complex issues that firms will have to grapple with when they embark on similar analyses.

Pay disparities within a firm can arise from one of four distinct reasons.

  • Gender composition of hires: There may be more women hired in Type A relative to Type B jobs.
  • Entry salaries: The entry salaries for women in Type A (or Type B) jobs may be different from that for men. Perhaps the women in Type A jobs are paid $800 and the men $1,200 when they join; recent research shows that men are more likely to negotiate when joining a new job, leading to higher entry salaries.
  • Salary growth: Women may be promoted from Type A to Type B jobs at a lower rate.
  • Attrition: Women from Type B jobs may be more likely to leave, relative to men in Type B jobs and women in Type A jobs.

Read the full article about firming up pay equity by Jishnu Das and Clement Joubert at Brookings.