Gender Pay Gap in the US Service Industry: A Regression Analysis

This study analyzes the existing condition of the US economy in terms of the gender pay gap in the service industry. The regression analysis suggests that the gender of the worker has no influence over the wage of the worker. Policy recommendations are also provided to improve the gender wage gap.

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ECONOMICS ASSIGNMENT

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Table of contents
Introduction................................................................................................................................3
Literature review........................................................................................................................3
Hypothesis statement.................................................................................................................4
Data analysis..............................................................................................................................4
Economic analysis......................................................................................................................5
Policy recommendations............................................................................................................5
Conclusion..................................................................................................................................6
Reference....................................................................................................................................7

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Introduction
The gender pay gap is one of the major problems in the world as well as in the United States
of America. The gender pay gap not only violates the basic human rights of the individual but
also indulges in discriminatory practices in daily lives (Flinn, Todd & Zhang, 2018). The
objective of the research is to find out the existing condition of the US economy in terms of
the gender pay gap. The study uses microdata with 8547 observations and carries out a
regression analysis to understand if gender influences the wage of the individual working in
the service industry of the USA.
Literature review
The gender pay gap is the inequality in the distribution of wage among male and female
members of the economy. Blau & Kahn (2017) stated that, historically, the productivity of
the labour has been judged based on the physical power of the workers and hence female
workers were assigned a lot let value compared to the male counterpart. Gender wage gap
creates a lot of problem for the economy that includes high poverty rates among women and
poor financial independence. Gender wage gap mainly affects the economy in the longer run.
It stalls the growth of the aggregate demand and the overall GDP of the economy in the long
term. Card, Cardoso & Kline (2015) noted that the gender wage gap is the opportunity loss
for the economy to capitalise on the growing opportunity to expand. With the advancement of
the economy and the emergence of specialisation in the labour market, impacts of gender on
the productivity has reduced, however, the wage structure has been the same making the
female worker worse off.
The gender pay gap has been one of the biggest problems of the US economy since the year
1960. The gender pay gap is the measure of how men and women are paid differently for the
same work. According to the data, the gender gap between men and women in the year 1960
has been around 57%. That means the median annual wage of women was only 58% of the
wages of the men (Bøler, Javorcik & Ulltveit-Moe, 2018). This not only directly impacted the
wages but also the work hours as well. The women had to work for more hours at that time in
order to earn the same wage as men. However, the government had taken a number of
measures to correct the inequality in the past. US government forced organisations to
publicize the data on gender wages (Boye, Halldén & Magnusson, 2017). Apart from that,
the government also allowed a special rebate for the organisations that discouraged any kind

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of wage negotiations and gender wage gap. This resulted in the betterment of the situation of
the wage inequality which was seen during 2007-08 (Srivastava & Sherman, 2015). The
median annual income of the women increased to 80% of the median wage of the male
workers. However, the pay gap is far more than the satisfactory level. Agencies and the
government estimated that the pay gap will further reduce after 2015 and the wage of the
worker will not depend on the gender of the labour (Roche, 2017). Thus, the main goal of the
government is to have a wage structure independent of the gender of the labour.
Hypothesis statement
The hypothesis for the research is,
The wages of the workers working in the service industry of the USA is independent of the
gender of the worker.
Data analysis
For the analysis of the topic data of 8547 individuals has been collected to see how their pay
depends on their gender in the year 2017. In this analysis, the wages of the workers is the
dependent variable and the gender of the worker is the independent variable. A categorical or
a dummy variable has been used for the data analysis wherein 1 denotes female and 0 denotes
male. Apart from that, log transformation of the wages has also been done to make the
variable scalable. The analysis of the data has been produced below:
Correlation between the variable:
The correlation coefficient is -0.138839 which shows that variables are not correlated to each
other as the value is close to 0 and not 1.
SUMMARY OUTPUT
Regression Statistics
Multiple R
0.0458
89
R Square
0.0021
06
Adjusted R
Square
0.0018
49
Standard
Error
1.1940
88
Observatio 3888

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ns
ANOVA
df SS MS F
Significa
nce F
Regression 1 11.69264
11.69
264
8.200
485 0.00421
Residual 3886 5540.843
1.425
847
Total 3887 5552.535
Coeffic
ients
Standard
Error t Stat
P-
value
Lower
95%
Upper
95%
Lower
95.0%
Upper
95.0%
Intercept
5.6155
87 0.030668
183.1
084 0 5.55546
5.6757
14 5.55546
5.67571
4
Female
-
0.1124
4 0.039264
-
2.863
65
0.004
21 -0.18942
-
0.0354
6
-
0.18942
-
0.03546
The regression analysis shows that the regression model is not a good fit. That means the
gender of the worker has no influence over the wages. The adjusted R square value is
0.001849, which is very low to conclude that gender does play a role to determine the wage
of the worker. In addition to that, the coefficient of the variable also depicts that, the variable
is not significant in explaining the changes in the dependent variable. The p-value is less than
0.05 which suggests that the reliability of the analysis and depicts the independent variable is
insignificant.
Economic analysis
Therefore, according to the data of wages in the year 2017, the gender gap has reduced. The
regression analysis has shown that the wage of the worker is not determined by the gender of
the worker. Since the year 1980, the gender gap has reduced from 66% to 91% which is
impressive (Abraham, 2017). Apart from the fairness of the distribution of wealth, the
reduced gender gap may improve the health of the US economy in the future. With better
gender gap the female workers of the economy will have more time to complete their
academic degrees and hence can become more skilful (Bhalotra & Fernández, 2018).
Policy recommendations
Despite the massive improvement in the gender wage gap, the economy may still face some
of the problem pertaining to the inequality due to the slowed narrowing of the gap. In order to

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reach a perfect equality, the government needs to have a better set of policies. Improved
maternity leaves with pay in the organisations need to be enacted. This will not only improve
the birth rate but the productivity at the same time. In addition to that, awareness programmes
from the side of the government need to be initiated in order to make the organisations
understand the problems of the gender wage gap (Cebrián & Moreno, 2015). Female
entrepreneurship can also be encouraged in order to increase the equal participation women
in the managerial positions of the service sector. Easy capital availability for the female
entrepreneurs can intrigue the female workers and increasing the control of women over the
service sector of the economy.
Conclusion
Therefore, this study points out that, the severe problem of gender pay gap which has been
troubling the symmetry throughout the world has been on the decrease in the case of the
USA. The regression analysis suggests that the gender of the worker has no influence over
the wage of the worker. Although the gender pay gap has improved over the years, there is a
lot of work which needs to be done in order to have a perfect and equally distributed wealth.

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Reference
Abraham, M. (2017). Pay formalization revisited: Considering the effects of manager gender
and discretion on closing the gender wage gap. Academy of Management
Journal, 60(1), 29-54.
Bhalotra, S. R., & Fernández, M. (2018). Women’s Labor Force Participation and the
Distribution of the Gender Wage Gap. Journal of economics, 67(2), 56-84
Blau, F. D., & Kahn, L. M. (2017). The gender wage gap: Extent, trends, and
explanations. Journal of Economic Literature, 55(3), 789-865.
Bøler, E. A., Javorcik, B., & Ulltveit-Moe, K. H. (2018). Working across time zones:
Exporters and the gender wage gap. Journal of International Economics, 111, 122-
133.
Boye, K., Halldén, K., & Magnusson, C. (2017). Stagnation only on the surface? The
implications of skill and family responsibilities for the gender wage gap in S Sweden,
1974–2010. The British journal of sociology, 68(4), 595-619.
Card, D., Cardoso, A. R., & Kline, P. (2015). Bargaining, sorting, and the gender wage gap:
Quantifying the impact of firms on the relative pay of women. The Quarterly Journal
of Economics, 131(2), 633-686.
Cebrián, I., & Moreno, G. (2015). The effects of gender differences in career interruptions on
the gender wage gap in Spain. Feminist Economics, 21(4), 1-27.
Flinn, C. J., Todd, P. E., & Zhang, W. (2018). Personality traits, intra-household allocation,
and the gender wage gap. European Economic Review, 109, 191-220.
Roche, K. (2017). Millennials and the Gender Wage Gap in the US: A Cross-Cohort
Comparison of Young Workers Born in the 1960s and the 1980s. Atlantic Economic
Journal, 45(3), 333-350.
Srivastava, S. B., & Sherman, E. L. (2015). Agents of change or cogs in the machine?
Reexamining the influence of female managers on the gender wage gap. American
Journal of Sociology, 120(6), 1778-1808.