Wage discrimination at career entry in Switzerland: Reasons and implications

Bertschy, Kathrin (2018). Wage discrimination at career entry in Switzerland: Reasons and implications. In: Liebig, Brigitte; Gottschall, Karin; Sauer, Birgit (eds.) Gender Equality in Context. Policies and Practices in Switzerland (pp. 159-180). Barbara Budrich 10.2307/j.ctvbj7k3q.10

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In recent decades, it has been apparent that the educational and occupational pathways of women and men have been converging. Women, in particular, have benefited from the expansion of education and, with respect to the achievement of general education certificates, have advanced to the same level as men. While the educational attainment gap is closing, the gender gap in the workplace stubbornly persists.

Our analysis shows that wage discrimination is not the result of different career paths, but already exists at career entry. “Productivity” variables like formal qualifications and skills do not have any direct impact on wages. Also, different values (e. g. extrinsic or intrinsic work orientation) or different risk preferences are unlikely to influence the wages at career entry. We conclude that the early wage discrimination is partly due to the persistent gender segregation in the Swiss labor market and education system, which stimulate early gender-typed occupational career decisions. Findings show a wage discrimination of 7.3% at career entry. Young women have lower earnings due to lower salaries in traditional female occupations and because of wage discrimination in gender-mixed occupations as well as in typically male professions. In highly segregated jobs, women in typical male-jobs often “choose” or get allocated to specific work contents that go together with lower compensation; men do the contrary in typical female-jobs. These niche activities are economically
inefficient because training qualifies women for better paid activities. Young women do not choose or are not allocated to these activities they have trained for.

Possible reasons for early wage gaps

Unexplainable wage differentials at career entry might be slightly overestimated, and also within our data set. However, the majority of the inexplicable differences in wages are likely the result of discrimination. One possibility is the so-called “statistical” gender discrimination. Companies assume that sooner or later, women tend to reduce their working hours. From the start, these companies consciously or unconsciously pay lower salaries to women, assign them lower paying jobs, or do not admit them the same development in wages as for men. In sociological and economic theory, this effect is referred to as statistical discrimination, because a specific behavior (the one of the companies) is derived from observed probabilities (women reduce their employment more often than men due to parenting). This behavior of the companies discriminates against all women, including those not complying with this assessment and those not intending to reduce their workload, with or without children.

Generous family-friendly policies, such as long maternity leaves and/ or part-time work protections, made it possible for more women to work. But they can also enforce statistical discrimination: Woman are more likely to work in low segment, lower paid jobs and less likely to be managers in countries with generous family-friendly policies, as shown by Blau and Kahn (2013) in a study comparing 22 countries. To avoid statistical discrimination, policies should be devised gender neutral. This is apparent in countries/regions including Iceland, Sweden and Quebec, where parental leave policies encourage both men and women to take time off for a new child. Apart from measures against education and labor market segmentation, gender-neutral state policies could thus help to close the early gender wage gap. Secondly, solidarity among men is also likely to play a role. In sociological theory, this behavior is known as discrimination theory, which states that “the same” or “the like” is preferred. As there are many more men than women in superior positions and as such, men more often make employment or wage decisions, they may prefer applicants or employees with similar characteristics, for example. This preferential treatment can also be unconsciously done.

Implications

Implications of gender wage gap on work and family and the persistence of gender inequalities can be manifold. In order to maximize household-production, young professionals in couple households quickly divide the paid and house work according to the traditional pattern Analyses with TREE-Data show that young couples divide household labor and paid work based on hourly wages. An unequal division of labor will be reinforced over time due to the different, statistically unjustifiable wage developments for men and women. From an economic point of view, and with regard to an optimal allocation of human resources, this development is economically inefficient. The lower incomes of women at career entry also cause these economically problematic dynamic trends. The interaction of all these effects is jointly responsible for the persistence of gender inequalities.

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