Closing The Gap

Women are slowly pursuing more high-paying degrees, but the pay gap remains, says new research

Commencement at Barnard College
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Economists estimate that the gender pay gap — the gap between the median salaries of all working men and women in the U.S. — is about 80 cents earned by women for every dollar earned by a man. When CNBC Make It spoke with economists about the causes behind the pay gap, several pointed to education.

Today, women outnumber men at all levels of education, but many pursue degrees in traditionally lower-paying fields.

But according to new research from Carolyn Sloane, an assistant professor at the University of California, Riverside, and Erik Hurst and Dan Black, professors at the University of Chicago, women are slowly shifting to higher-paying majors.

"College major choice has strong predictive power in explaining gender wage gaps, independent of occupation choice," they wrote.

By analyzing data from the U.S. census, the researchers found that women born in the 1950s chose majors with potential wages that were 12.5% lower than their male peers. But women born in the 1990s, who are the most recent generation to graduate, chose majors with potential wages that were 9.5% lower, indicating a slow but significant shift.

Commencement at Wellesley College
REUTERS/Brian Snyder

That said, after college, women also tend to enter lower-paying fields, even when they have similar educational backgrounds to men.

For instance, women with MBAs take home 74 cents for every dollar earned by men with MBAs. Economists suggest one reason for the gap is that women with MBAs are more likely to pursue careers in fields like marketing and advertising compared to men, while men are more likely to pursue careers in higher-paying industries like financial services.

However, Sloane, Hurst and Black found evidence that occupational divergence after college is also narrowing.

For instance, women in the 1950s with engineering degrees held jobs with potential wages that were 14% lower than men with engineering degrees, but women who were born in the 1990s who majored in engineering "ended up working in occupations with roughly the same potential wages as men who majored in engineering."

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According to Nicole Smith, research professor and chief economist at the Georgetown University Center on Education and the Workforce, the lower-paying fields that women pursue in college and in their careers do account for some of the pay gap, but not all of it.

"We still have women making personal decisions to pursue degrees that pay less," Smith told CNBC Make It, listing care-giving fields such as teaching and nursing as examples of lower-paying degrees — and then occupations — that women pursue disproportionately. "We still have occupational segregation, which yes, it is a personal decision, but it's also driven by socioeconomic challenges, and it is also driven by expectations about what roles women should play in society."

"Occupational segregation" is just one factor that contributes to the current pay gap, said Smith. When Georgetown's CEW looked at salaries among individuals in the same industries with the same jobs and the exact same level of education, men still earned more. When controlled for factors such as these, Smith and her team found that women still earn about 92 cents for every dollar a man makes.

The concept of occupational segregation also raises the issue of choice. Are more women slowly choosing to pursue high-paying degrees and careers, or are academic institutions and employers slowly welcoming more women?

"I would say sometimes it's a choice and sometimes it's not," Lydia Frank, PayScale vice president of content strategy, told CNBC Make It of the trend of women pursuing lower-paying careers. "Sometimes that's just where they're getting hired, even if they have been attempting to be hired elsewhere."

Anthony P. Carnevale, director of Georgetown's CEW, said that ultimately, the reason highly-educated women experience significant wage gaps is discrimination.

"Women's earnings still lag their exceptional educational progress," he said in a statement. "At the heart of the gender wage gap is discrimination in pay for the same sets of qualifications and experience."

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