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Male Female Wage Differentials In Canada Essay

3434 words - 14 pages

1. Abstract
This study looks at differences in male and female wages using data from Statistics Canada’s annual Survey of Consumer Finance (SCF) and Survey of Labour Income Dynamics (SLID). In addition to information on annual income, this study also looks at hourly wage data, which is a more precise measure as the earnings data series takes into account the price of labour as well as quantity (i.e. individuals’ work/leisure preferences). This study looks at the variables of race, highest achieved level of education as well as age to examine the existence of a wage gap. Like other studies, we have found that males have a higher wage in each of these areas, with females earning an average ...view middle of the document...

e. individuals’ work/leisure preferences), whereas the data series based solely on wage information can more accurately articulate the actual price of labour alone without being skewed by possible preference trends.
Based on the earnings data collected by way of the Survey of Consumer Finances (SCF) and the Survey of Labour and Income Dynamics (SLID), the female-male ratio based on full-year full-time (FYFT) workers’ annual earnings has steadied to around 70% since 1992 as seen in Figure 1. This prolonged period of relative stability can be somewhat perplexing given the policy changes enacted by Canadian governments to improve pay equity, “For example, pay equity laws now cover federal workers, public sector workers in many provinces, and private sector workers in Ontario and Quebec.” (Baker, Fortin 2004). This is especially intriguing when it is clear that wage-based ratios tell a much different story. Figure 1 clearly displays a significant amount of discrepancy between earnings- and wage-based ratios. The wage-based ratio is consistently over 10 percentage points higher and shows a gentle upward trend indicating gradual progress in pay equity over the years compared to the earnings-based ratio which seems to stall at around 70%. The higher degree of variation found in the earnings-based ratio during the mid 90s can be attributed to increases in male unemployment levels which lower the difference between earnings- and wage-based ratios, most likely caused by a decrease of the gender difference in hours during recessionary periods as suggested by Baker and Drolet (2010). There is a crucial distinction to be made when wage-based data shows the apparent effectiveness of pay equity legislation whereas earnings-based pay does not. The distinction, as mentioned previously, amounts to earnings data encompassing the price of labour as well as individuals’ decisions on how much to work, which directly correlates to gender gaps in labour supply. This adds more variability and difference in data because work/leisure preferences between genders are, of course, not equal. Wage-based data solely takes into account the price of labour which essentially “...defines gender-based labour market discrimination.”(Baker and Drolet 2010).
It is quite possible that public perceptions of gender based wage gaps have been heavily influenced by earnings based data. Until only recently, most media stories, studies and even
Canadian policy debate have been driven by earnings based ratios rather than ratios based directly on hourly wages which are, in actuality, the foundation of pay equity legislation. The importance of the differences between these two data series cannot be understated when there is easily an opportunity for the public to be misled in regards to pay inequity and the effectiveness of pay equity legislation in Canada.

3. Evidence of Male-Female Wage Differentials

3.1 Race
Women and black men have lower average hourly earnings than white men...

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