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Lesson 12 min 20 XP

The Gender Pay Gap

Why women earn less than men in virtually every country, what drives the gap, and which policies actually close it.

Measuring the Gap

Globally, women earn roughly 77 cents for every dollar earned by men. This 'raw' gender pay gap reflects differences in hours worked, occupation, industry, experience, and discrimination. When researchers control for these factors -- comparing men and women in the same jobs with the same qualifications -- the 'adjusted' gap narrows to roughly 5-8% in most developed countries. But the factors being 'controlled for' are themselves shaped by gender norms and discrimination.

Claudia Goldin, who won the 2023 Nobel Prize in Economics for her work on women and labor markets, showed that the single largest driver of the gender pay gap is the 'motherhood penalty.' Women's earnings drop sharply after having children while men's do not -- a pattern observed in virtually every country studied. The penalty reflects not just time out of the workforce but employer assumptions about mothers' commitment and availability.