Beyond Skills and Occupations: Unpacking Australia’s Gender Wage Gap

Authors: Elyse Dwyer and Silvia Griselda

Australian women earn on average 15% less per hour than men. What are the causes of this pay gap? Is it rooted in different occupational choices between men and women? Or does it reflect differences in pay across genders for identical occupations? We answer these questions using use population-wide taxation data covering the Australian workforce.

We find that:

  • Men and women are substantially segregated across occupations. For men and women to be distributed equally across occupations, two-fifths of men would have to change occupations (or two-fifths of women).
  • Approximately one-fifth of the estimated overall hourly gender wage gap is driven by men and women working in occupations with different pay rates. The remainder is driven by differences in pay within the same occupation.
  • We can see from the data that differences between genders in personal characteristics such as full-time status, educational attainment, number of dependents, and Australian Tertiary Admissions Rank (ATAR) scores do not account for the gender pay gap within occupations nor do they explain why women sort into lower-paying occupations. Among university-educated individuals of similar ATARs, women are less likely to sort into higher-paying career options (e.g. Science, Technology, Engineering and Mathematics or STEM).
  • Marriage and parenthood have a different effect on women’s hourly earnings than they do on men’s, which drive many of the differences in hourly pay within occupations.

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