Study: Earnings Inequality and the Gender Pay Gap in Canada: The Role of Women's Under-representation Among Top Earners
A new Statistics Canada study shows that the under-representation of women in top earnings groups accounts for a substantial (more than half) and growing share of the overall gender gap in annual earnings. The overall gender ratio in annual earnings—the average annual earnings of employed women as a percentage of the average annual earnings of employed men—has improved over time. It rose from 54% in 1978 to 69% in 2009, and remained between 68% and 69% from 2009 to 2015.
Factors such as education, work experience, hours of work, and occupation that have traditionally been used to account for the gender pay gap now leave a substantial portion of that gap unexplained. Increases in earnings at the top of the earnings distribution and the under-representation of women among top earners have raised the question of how much this contributes to the overall gender gap in annual earnings.
Today's study examined gender differences in annual earnings from paid employment over a period of nearly 40 years, from 1978 to 2015. The analysis is based on administrative tax data from the Longitudinal Worker File, representing a 10% random sample of Canadian workers. In each year, workers were classified into one of four earnings groups: the bottom 90% of all earners, the next 9%, the next 0.9% and the top 0.1%.
While some gains were made in the representation of women among top earners since the early 1980s, the study found that men outnumbered women by about 7 to 1 among the top 0.1% of earners in 2015. This ratio was lower among the next 0.9% of earners, at nearly 5 to 1, and among the next 9% of earners (3 to 1). In contrast, women accounted for just over one-half of earners in the bottom 90%.
The gender earnings ratio among the bottom 90% of earners was 83.5% in 2015, higher than the overall gender earnings ratio. For most women, average annual earnings compared with those of men were more favourable and have been improving faster than the overall numbers would suggest. The gender earnings ratio among the next 9% and the next 0.9% of earners exceeded 95% over most of the reference period. In the top 0.1%, the gender earnings ratio averaged about 79%.
The study also includes a simple simulation exercise that showed that the gender ratio of 69% in 2015 would have risen to 88% if women's representation in top earnings groups had been the same as that of men. This suggests that the under-representation of women among top earners accounted for 61% of the gender earnings gap in 2015. Furthermore, the share of the gender earnings gap that can be attributed to the under-representation of women in the top earnings groups has increased over time.
Results from the study will be updated as new data become available.
The research article "Earnings Inequality and the Gender Pay Gap in Canada: The Role of Women's Under-representation Among Top Earners," which is part of the Economic Insights (11-626-X), is now available.
For more information, contact us (toll-free 1-800-263-1136; 514-283-8300; STATCAN.infostats-infostats.STATCAN@canada.ca).
To enquire about the concepts, methods or data quality of this release, contact Aneta Bonikowska (613-864-0571; firstname.lastname@example.org), Analytical Studies Branch.
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