During the past two decades the education of women has been booming in practically all countries. Larger fractions of young women than young men are enrolled in universities in countries as culturally and economically diverse as Brazil, China, and Iran. In the United States, about 57% of the current graduates of four year colleges are women, while women receive 60% of all the master’s degrees. Note the radical change since 1970 when women received only 40 % of the degrees from four-year colleges. A recent report shows that American women are now even getting more PHD degrees than men, although the proportion varies a lot by field. Women receive only about one fifth of all engineering doctorates, and one quarter of all doctorates in computer science and mathematics, but they are getting a majority of the doctorates even in health sciences and biology.
Since earnings are on average strongly related to education levels, a natural issue to consider is the current and future effects of these trends in college enrollment and graduation rates on the earnings of women compared to men. In particular, will the average earnings of women beginbefore long to exceed that of men after being so far behind in the past?
In fact, most countries have experienced sharp reductions in the gender gap in hourly earnings during the past several decades. Again, to use the United States as an example, in 1980 the median weekly earnings of women who worked full time was a little over 60% of the median weekly earnings of full-time men. By 2009, that ratio was just slightly below 80 percent. For younger women, the trends are larger and more dramatic. The ratio of the weekly earnings of fulltime women aged 25-34 to that of men of the same age was only 69% in 1980, but this ratio rose to almost 89% in 2009. The change in the gender earnings gap was also quite large for men and women aged 35-44 years old. The gender gap in earnings at ages 25-44 are relevant for predicting future trends in this gap since these ages incorporate the effects on earnings of the growth in recent years in the education of women relative to men, and these age groups also incorporate the effects of the greater education of women on their commitment to working.
Some simple, although rough, calculations provide an indication of the possible magnitude of the effect of the growth in the education of women on the gender gap in earnings. Assume that men and women are only either college graduates or high school graduates, and that the average college graduate who is working full time earns on average about 60 percent more than the average full time high school graduate of the same sex. To incorporate the gender gap in education, I assume that about 40% of women graduate a four-year college compared to only 26% of men.
If men and women of the same education received the same earnings, the assumed greater propensity of women to receive a college education would imply that the average earnings of women would exceed the average earnings of men by about 8%. This is a sizable reversal of the usual gender gap in earnings. Of course, a more realistic calculation would recognize that even full time working women of a given number of years of schooling typically earn less than that of full time working men with the same years of schooling. If the gender gap in earnings of men and women with the same schooling years were 15%, than the average woman would earn about 11% less than the average man; on the other hand, if this earnings gender gap were 10%, than the gender gap in average earnings would only be 4%.
Of course, many other factors in addition to years of schooling affect the earnings of women and men. Some women do not work in order to stay home to take care of their children, although the fraction of women who are full time homemakers has sharply declined during the past several decades, and college educated women are more likely to work than are less educated women. In addition, even full time women work fewer hours per week and fewer weeks per year than full time men, again mainly because women typically try to combine work with spending time caring for their children. These considerations help explain why the average earnings of women are below the average earnings of men with the same years of schooling.
On the other side of the ledger, teen age girls are less likely to drop out of high school than are teen age boys, and the earnings of high school dropouts are quite low. Moreover, as I showed at the beginning of this discussion, American women are also more likely to receive post-graduate degrees, and persons with advanced degrees tend to earn a lot more than persons with just four years of college.
Although the average earnings of full time women have not yet overtaken that of full time men, as we ahve shown the gender earnings gap has narrowed substantially. Indeed, in about 30% of all American households with two earners, wives are already earnings more than their husbands. Moreover, if the gender gap in education continues to widen, it may not be long before the average earnings of fulltime women does exceed that of men. This would mark a culmination of a remarkable reversal of the gender gap not only in education but also in earnings.