The gender pay gap measures inequality but not necessarily discrimination

The gender pay gap (or the gender wage gap) is a metric that tells us the difference in pay (or wages, or income) between women and men. It’s a measure of inequality and captures a concept that is broader than the concept of equal pay for equal work.

Differences in pay between men and women capture differences along many possible dimensions, including worker education, experience and occupation. When the gender pay gap is calculated by comparing all male workers to all female workers – irrespective of differences along these additional dimensions – the result is the ‘raw’ or ‘unadjusted’ pay gap. On the contrary, when the gap is calculated after accounting for underlying differences in education, experience, etc., then the result is the ‘adjusted’ pay gap.

Discrimination in hiring practices can exist in the absence of pay gaps – for example, if women know they will be treated unfairly and hence choose not to participate in the labor market. Similarly, it is possible to observe large pay gaps in the absences of discrimination in hiring practices – for example, if women get fair treatment but apply for lower-paid jobs.

The implication is that observing differences in pay between men and women is neither necessary nor sufficient to prove discrimination in the workplace. Both discrimination and inequality are important. But they are not one and the same.