Has Higher Education Among Young Women Substantially Reduced the Gender Gap in Employment and Earnings? : Executive summary

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Executive summary

It has been well documented that young women have been gaining ground on young men in terms of educational attainment. In 1981, 16.2% of women and 15.5% of men aged 25 to 29 who were in the labour force held a university degree. The gap only widened moderately by 1991, as 19.1% of young women and 16.1% of young men held a university degree. By 2001, the gap had increased dramatically: 31.3% of young women and 21.6% of young men held a university degree.

The objective of this study is to assess the role of rapidly rising educational attainment of young women in explaining trends in the gender gap in labour market outcomes, such as obtaining full-time employment and earnings. Census data are used to examine these issues.

The gender gap in the probability of full-time employment (among labour force participants) declined in the 1980s, and this has largely been associated with changing family composition of young men and women, as well as unexplained factors. Young men increasingly became more likely to remain single than young women, and single people are generally less likely to be employed full-time. Educational factors played little or no role in helping to reduce the gap. In contrast, there was essentially no change in the gap in the 1990s.

In terms of the log earnings gap (among full-year, full-time workers), we note a large decline in the 1980s, which was mainly associated with changing family characteristics and unexplained factors. Unlike the gap in the probability of full-time employment, however, educational attainment did play a (smaller) role in reducing the earnings gap over this period.

In contrast, education was the main driving force behind a (smaller) reduction in the gap in the 1990s. In fact, education almost fully explained the declining gap over the decade. Unlike the 1980s, however, other characteristics generally did not contribute towards reducing the gap, and there was virtually no unexplained reduction in the gap. The lack of an unexplained reduction in the gap was, in fact, the most important factor behind the slowing convergence in the earnings gap in the 1990s. In the United States, Blau and Kahn (2004) examined the issue of slowing convergence in the gender wage gap. They too find that the largest factor contributing towards the slowing wage convergence is the "unexplained gap". Specifically, they find evidence that changes in labour force selectivity, changes in gender differences in unmeasured abilities and labour market discrimination, and changes in the relative advantage of supply and demand shifts all played a part in explaining the slowing convergence of the gender wage gap.

The earnings gap in the 1990s actually rose moderately at the university level, but remained unchanged at the college level. The relative stability in the disciplines men and women continued to take in university may have prevented the earnings gap from further declining in the 1990s. It may, in fact, have contributed towards increasing the gap. Public spending cuts were felt by health and education graduates (female-dominated fields) and the high tech boom helped engineering and other technology graduates (male-dominated fields). Alternatively, the rapid rise in the number of women in universities may have extended further down the distribution of unobserved earnings-related characteristics, which may explain why the unexplained component is so prominent. The academic discipline was not available in the U.S. data used by Blau and Kahn (2004). However, it is possible that it too was a factor in their findings.

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