Mind the Gap: How Higher Education Contributes to Gender Wage Disparities

Support for the notion that systemic gaps exist between men’s and women’s earnings tends to fall along ideological lines: the American Association of University Women has estimated that women get paid 23 percent less than their male colleagues, while the conservative American Enterprise Institute has called the idea a “statistical fairy tale” promoted by a “feminist propaganda machine.” Yet, a recent study from Stanford University economist Raj Chetty and his research team shows that there are significant gaps in the earnings between men and women who attend the same colleges, raising new questions about higher education’s contribution to wage inequality between the sexes.

For example, do earnings gaps stem from women at certain schools having a greater preference for leaving the workforce after they get married to raise children? Or are these gaps the result of differences in women’s major choices, with some schools more effectively encouraging women to pursue high-paying but traditionally masculine fields like business and engineering? To what extent is labor market discrimination a factor? We can explore these questions using Chetty’s alternative measures of income, which separate the average earnings of female students from those of their male peers, measured in their early 30s, and reports on marriage behavior among past students at different institutions.

In doing so, we see clearly that the size of the earnings gaps between men and women is strongly associated with the selectivity and prestige of the institution, with more elite schools showing larger gaps between the sexes. In general, schools whose former students earn more also have higher gender gaps. This effect is most pronounced within Ivy league schools. At the low end, University of Chicago students of both genders had average earnings of around $92,000 and a gap of around $39,000. In contrast, the average earnings of University of Pennsylvania students were over $172,000, while the gap between male and female students was around $131,000.

Because the difference in the share of students at these schools who are married is relatively small (51 percent at the University of Chicago, and 59 percent at the University of Pennsylvania), it’s unlikely that these gaps emerge as a result of women choosing to leave the labor force after they tie the knot. Instead, it appears that the degree mix across genders could explain the variation in earnings gaps at these institutions. Discrimination in the labor market is also a possibility, though it seems unlikely whether individuals experience of discrimination would hinge on whether they attended one Ivy league school instead of another.

Across less-selective institutions, it appears that some of the variation in earnings that occurs is the result of women leaving the labor force once they are married. In general, schools with higher percentages of students who are married tend to experience higher gaps in earnings, even within a particular selectivity band. For example, among open access four-year institutions, at Brigham Young University - Idaho, an open access four-year school, 85 percent of former students are married, and the gap between the average male and female students is around $53,000. On the other side of the spectrum, only 10 percent of former students of Atlanta Metropolitan State College are married, and the average pay is actually higher for female students, despite relatively similar levels of prestige and selectivity.

The less selective the schools are, the stronger the relationship between marriage rates and earning gaps tends to be. That these gaps are correlated with marriage rates likely indicates a preference among female students who marry to leave the labor force to take on more traditional roles. In contrast, at Ivy Plus and other elite schools, the relationship appears to fade away. The marriage rates for students at top colleges and universities are fairly consistent across institutions, but the earnings gaps are wide.

As policymakers increasingly move to using post-graduate earnings as a marker of institutional quality,  it’s important to keep these gender pay disparities in mind - and to evaluate the reasons why these pay gaps exist. For example, if women are earning less because they are choosing to leave the labor market to raise a family, policy interventions are likely not an appropriate solution. On the other hand, if women are feeling discouraged from pursuing male-dominated fields, schools could develop ways to address the concerns of these women directly, such as active recruitment and celebration of women in STEM.

While focus on the wage gap has become something of an ideological football, understanding the context behind how these patterns evolve has important implications for how we think about equity between the sexes. We cannot identify outright employer discrimination from this data alone, but we can shed light on the societal factors that may be limiting women’s choices even when discrimination is not present. For instance, if women are choosing lower paying fields due to harassment or hostility in disciplines where they otherwise would have excelled, that’s a problem for both women and the economy as a whole. Similarly, if financial factors like the lack of available child care are leading women to chose to leave promising careers after they marry it could be that they would be better off in the long-run by working instead. Women and men alike should be able to make the decisions that are best for themselves and their families, and should be unconstrained by both pay discrimination and the societal pressures at hand.