About the author

Mark J. Perry is concurrently a scholar at AEI and a professor of economics and finance at the University of Michigan's Flint campus. He is best known as the creator and editor of the popular economics blog Carpe Diem. At AEI, Perry writes about economic and financial issues for American.com and the AEIdeas blog.

‘Ceteris paribus': Once you start controlling for important factors, the 17.8% gender wage gap starts to disappear

Every year, the Bureau of Labor Statistics (BLS) releases a report on the “Highlights of Women’s Earnings.” Here’s the opening paragraph from the most recent BLS report on women’s earnings in 2011:

In 2011, women who were full-time wage and salary workers (working 35 or more hours per week) had median weekly earnings of $684, or 82.2% of median earnings for male full-time wage and salary workers ($832). In 1979, the first year for which comparable earnings data are available, women earned 62% of what men earned.

How do we explain the fact that women working full-time earned 82.2 cents for every one dollar men earned in 2011 (and the 17.8% pay gap)? Here’s how the National Committee on Pay Equity explains it:

The wage gap exists, in part, because many women and people of color are still segregated into a few low-paying occupations. More than half of all women workers hold sales, clerical and service jobs. Studies show that the more an occupation is dominated by women or people of color, the less it pays. Part of the wage gap results from differences in education, experience or time in the workforce. But a significant portion cannot be explained by any of those factors; it is attributable to discrimination. In other words, certain jobs pay less because they are held by women and people of color.

Let’s investigate the claim that the gender pay gap is a result of discrimination by looking at some of the wage data in the BLS report:

1. “Among full-time workers (those working 35 hours or more per week in a job), men are more likely than women to have a longer workweek. Twenty-five percent of men, compared with 14 percent of women, worked 41 or more hours per week, in 2011. Women were more likely than men to work 35 to 39 hours per week: 13 percent as opposed to 5 percent. A large majority of both male and female full-time workers had a 40-hour workweek; among these workers, women earned 88 percent as much as men earned.”

Comment: Some of the raw wage gap automatically disappears just by simply controlling for hours worked per week, something not mentioned by the National Committee on Pay Equity. In fact, for the group of full-time workers who work 35-39 hours per week, women earned 109.9% of what their male counterparts earned in 2011. For workers who worked 45-48 hours per week in 2011, women earned 91.1% of their male counterparts. For that group, about 50% of the 17.8% raw wage gap disappeared when only one variable, among many other variables that would affect earnings, was controlled for: hours worked per week.

2. The BLS reports that for single workers who have never married, women earned 96.9% of men’s earnings in 2011, which is a wage gap of only 3.1% (see Table 1). For that group, more than 82% of the unadjusted 17.8% wage gap is explained by just one variable (among many): marital status.

3. Also from Table 1 in the BLS report, we find that for married workers with a spouse present, women earned only 76.6% of what married men with a spouse present earned in 2011. Therefore, BLS data show that marriage has a significant and negative effect on women’s earnings relative to men’s, but we can assume that marriage is a voluntary lifestyle decision, and it’s that choice, not labor market discrimination, that contributes to much of the gender wage gap for married workers.

4. Also in Table 1, the BLS reports that for young workers ages 20-24 years and 25-34 years, women earn 93.2% and 92.3% of their male counterparts, respectively. Once again, controlling for only one variable – age – we find that almost two-thirds of the unadjusted raw wage gap disappears for young workers.

5. If we look at median hourly earnings, instead of median weekly earnings, the BLS reports in Table 9 that women earned 86.8% of what men earned in 2011, which accounts for more than 25% of the raw gender earnings gap when measured by weekly earnings. And when we look at young workers, women ages 16 to 19 years earned 97.5% of their male counterparts in 2011, and for the 20-24 year old group, women earned 92.5% of what men earned. For unmarried hourly workers of all ages, women earned 93.7% of their male counterparts in 2011, which explains almost 50% of the unadjusted gender difference in hourly earnings.

6. In Table 8, the BLS reports that for single workers with no children under 18 years old at home (single workers includes never married, divorced, separated and widowed), women’s median weekly earnings were 96.0% of their male counterparts. For this group, once you control for marital status only, you automatically explain 78% of the gender earnings differential.

7. Also in Table 9, the BLS reports that married women working full-time with children under 18 years at home earned 77.5% of what married men earned working full-time with children under 18 years. Once again, we find that marriage and motherhood have a significantly negative effect on women’s earnings; but those lower earnings don’t necessarily result from labor market discrimination, they more likely result from personal choices about careers, workplace flexibility, and hours worked, etc.

Bottom Line: When the BLS reports that women working full-time in 2011 earned 82.2% of what men earned working full-time, that is very much different than saying that women earned 82.2% of what men earned for doing exactly the same work while working the exact same hours, with exactly the same educational background and exactly the same years of continuous, uninterrupted work experience. As shown above, once we start controlling individually for the many relevant factors that affect earnings, e.g. hours worked, age, and marital status, most of the raw earnings differential disappears. In a more comprehensive study that controlled for all of the relevant variables simultaneously, we would likely find that those variables would account for almost 100% of the unadjusted, raw earnings differential of 17.8% lower earnings for women reported by the BLS. Discrimination, to the extent that it does exist, would likely account for a very small portion of the raw gender pay gap.

There is no gender gap in wages among men and women with similar family roles. Comparing the wage gap between women and men ages 35-43 who have never married and never had a child, we find a small observed gap in favor of women, which becomes insignificant after accounting for differences in skills and job and workplace characteristics.

This observation is an important one because it suggests that the factors underlying the gender gap in pay primarily reflect choices made by men and women given their different societal roles, rather than labor market discrimination against women due to their sex.

To claim that a significant portion of the raw wage gap can only be explained by discrimination is intellectually dishonest and completely unsupported by the empirical evidence. And yet we hear all the time from groups like the National Committee on Pay Equity, the American Association of University Women, the Institute for Women’s Policy Research, and even President Obama that women “are paid 77 cents for every dollar paid to men.” And in most cases when that claim is made, there is almost no attention paid to the reality that almost all of the raw, unadjusted pay differentials can be explained by everything except discrimination – hours worked, age, marital status, children, years of continuous experience, workplace conditions, etc. In other words, once you impose the important ceteris paribus condition of “all other things being equal or held constant,” the gender pay gap that we hear so much about doesn’t really exist.

Discussion: (57 comments)

BLS=government bureaucracy, which almost automatically means there is a strong leftward bias. You expect lefties to be intellectually honest?

Mostly a well written article, but let me suggest an edit. Under point #1, COMMENT you state, “In fact, for the group of full-time workers who work 35-39 hours per week, women made 109.9% more than their male counterparts in 2011.” I highly doubt that women made more than double what men did in that category. Perhaps it should read, “women made 109.9% of the salaries of their male counterparts…”

Sad but this argument should have been settled back in the early 80’s and would have if the article “The 59Cent Fallacy” by Wendy McElroy had been read and taken to heart and mind. She pointed out, as you did, that continuous years of experience, number of work hours, need for flexibility for mothers and wives, education and training accounted for almost all of the wage gap. Sad that we have to retread ground that was well covered decades ago. But such is the nature of the “progressive” leviathan.

BLS is producing statistics from data and then puts commentary in front relevant to the data.

but I’m questioning the use of the concept ceteris paribus which is used when modelling a theory that has multiple influences – all moving , and you have to account for each and every independent variable – in the working model – not only the fact that they are dynamic but their quantitative impact.

“A ceteris paribus assumption is often fundamental to the predictive purpose of scientific inquiry. In order to formulate scientific laws, it is usually necessary to rule out factors which interfere with examining a specific causal relationship. Under scientific experiments, the ceteris paribus assumption is realized when a scientist controls for all of the independent variables other than the one under study, so that the effect of a single independent variable on the dependent variable can be isolated. By holding all the other relevant factors constant, a scientist is able to focus on the unique effects of a given factor in a complex causal situation.”

NBIR goes the opposite way- it goes for the case where says the other variables are normalized – i.e.

” There is no gender gap in wages among men and women with similar family roles. Comparing the wage gap between women and men ages 35-43 who have never married and never had a child, we find a small observed gap in favor of women, which becomes insignificant after accounting for differences in skills and job and workplace characteristics.”

They apparently believe that a boss does not think in his/her mind that the employee is a woman and even though has no kids and is older that she’s not going to contemplate having them.

That’s not entirely true – in reality but certainly also not in the mind of others who may just simply believe if she is a woman and still of child-bearing age that she has a “pre-existing” condition that could affect the employers ability to count on her to NOT EVER have a child.

Which is to say that there can be a prejudice EVEN IN assumptions.

You can’t change the fact that she is women and you can’t easily change prejudices.

and you can’t deny that such discrimination HAS ALWAYS existed and was used openly as an overt justification.

To claim now that it has all gone away would be like claiming we no longer have racial prejudices.

” “in the theoretical world – only price is relevant for supply/demand – not other things – like durability or reliability or even something like color or looks.”

when you look at most supply/demand analyses – they often hold all other variables constant – assuming no effect – then just focus on supply/demand and price but in the real world – it’s much more dynamic and people make decisions on a much wider variety of factors beyond just price and scarcity.

the supply/demand models assume that all buyers think the same, have the same values, and are looking for the same product.

In the real world – they may actually be choosing between a Red Ford and a Blue Dodge and you’ll likely never see a real “study” where the only buyers all want exactly the same Red Ford much less a chart showing price vs demand.

these models are conceptual models – not real world models.

they can help explain effects in isolation but they seldom produce real world scenarios.. there are too many variables and each variable can have effects on other variables.. etc…

I did get it a bit muddled. let’s look at a definition (from .investopedia

Definition of ‘Ceteris Paribus’ Latin phrase that translates approximately to “holding other things constant” and is usually rendered in English as “all other things being equal”. In economics and finance, the term is used as a shorthand for indicating the effect of one economic variable on another, holding constant all other variables that may affect the second variable.

Investopedia Says Investopedia explains ‘Ceteris Paribus’ For example, when discussing the laws of supply and demand, one could say that if demand for a given product outweighs supply, ceteris paribus, prices will rise. Here, the use of “ceteris paribus” is simply saying that as long as all other factors that could affect the outcome (such as the existence of a substitute product) remain constant, prices will increase in this situation. Contrasts with “mutatis mutandis”.

but there are known flaws with these kinds of analyses because they are based on assumptions – for instance:

“Also from Table 1 in the BLS report, we find that for married workers with a spouse present, women earned only 76.6% of what married men with a spouse present earned in 2011. Therefore, BLS data show that marriage has a significant and negative effect on women’s earnings relative to men’s, but we can assume that marriage is a voluntary lifestyle decision, and it’s that choice, not labor market discrimination, that contributes to much of the gender wage gap for married workers.”

and I did comment that he assumed it was “voluntary choice for females that did have an effect but said nothing about “voluntary’ for males either assuming no effect or assuming that there should be no effect.

but this is a problem when engaging in Ceteris Paribus when you start making assumptions… which in this case is clearly biased on Perry’s analysis IMHO.

LOL. Professor Larry, not sure what orifice you pulled the “only price is relevant according to economic theory” idea from, but I assure you it’s not in any basic economics textbook, nor do any free-market economists claim it to be so. But you obviously wouldn’t know that, given your embarrassing comments, especially this: “so when we talk about supply/demand – price is not the only variable. In fact there can be a wide variety of variables – and that wide variety itself can vary with people. what theory correctly recognizes this behavior?”

In microeconomics, supply and demand is an economic model of price determination in a market. It concludes that in a competitive market, the unit price for a particular good will vary until it settles at a point where the quantity demanded by consumers (at current price) will equal the quantity supplied by producers (at current price), resulting in an economic equilibrium for price and quantity.

Examples of problems of applied economics: the Minimum-wage controversy Leonard notes one area of disagreement amongst applied economists which became famous in the US. That was the minimum-wage controversy. He notes that the fierceness of this controversy was odd because the likely effects were small and that several seemingly more important policy issues such as (entitlement reform, health insurance, CPI calculation) generated nothing like the storm. His explanation is that while this controversy was not especially important to the economy, it was very important to economics and economics as a policy science. His explanation for this is that minimum wage research came to be seen as a test of the usefulness of applying neoclassical price theory to the wages and employment. In other words it was not just a technical quarrel over such things as the sign and size of wage-elasticity but rather an installment in a long running methodological dispute over whether neoclassical price theory is in reality of any use

See? He pulls some definition out of somewhere, then misapplies it, thus demonstrating his complete lack of understanding.

You cannot reason with this man; he’s a ideologue. I’ve dealt with him before, and this man determines the answer before he asks the question, and then when you try to tell him he’s wrong, he flips out.

Case in point, supply and demand. He knows he is wrong. I’ve provided him with the evidence, as I know many of you others have as well. He even often provides the damning evidence on his own. But his mind is made up. You can;t dissuade a man who believes he knows all and that he is God. he makes Peak look rational.

I strongly recommend you all ignore him completely. Fighting with a slime monster will only make you dirty and exhaust you.

There’s a reason why he personifies the phrase “Gross error” as noted by George Seglin

there is no ideology here – unless you think these descriptions/definitions which were cited word-for-word are in your view ideology.

the point is that these things are conceptual models that assume pure commodities and the buyers are all focused only on those commodities and the only thing that varies is price…

which.. in theory… when you disregard all other factors is correct.

but that’s not how the real world actually works and all of these references will point that out.

the fields that DO deal with the others factors are applied economics and econometrics …

the “ideologues” are the ones that inappropriately and wrongly try to use these basic conceptual models in real world scenarios.

economic theory is not real world. it’s main purpose is to help to understand basic concepts – not actually predict real world outcomes – which is much, much more difficult because there are usually a LOT of factors involved besides the bare skeleton premises…

You can read the definition, but you cannot apply them, ergo (Latin), you don’t know what they mean.

An ideologue is all you are. A misguided, pathetic lost soul. A fool who will go so far to ignore what is right in front of him, to demand that “the real world fit models” not models fit the real world.

You’re no better than a blind man, groping for anything.

Educate yourself. better yet, don;t. You seem to be incapable to bettering yourself in any way.

What is ideology is insisting you’re right when you’re wrong. What is ideology is refusing to accept counter-evidence. What is ideology is refusing to learn anything about what you are discussing.

That is what you do Larry. You commit Gross errors (by the way, Larry’s last name is Gross).

Supply and Demand determine a price, which is true based on the definitions you linked to. Then you claim the theory is wrong because price doesn’t determine demand. So, you are arguing the theory is wrong based on the opposite of what it is. Your own evidence contradicts that, but you refuse to see that. You’ve already made up your mind.

Let me prove my point:

Larry, oh Great and Wise Professor Larry, according to economic theory, what are the determinants of Demand?

re: supply and demand – price is NOT the ONLY discriminate that people use – you’re using a conceptual theory that assumes all other factors are null and only price and commodity are in effect.

re: prove your point – it’s not hard guy – all the explanations of supply and demand do note that other factors – real world factors are not involved and if they were it would be a much more complex problem.

you and others are trying to understand the world in sound-bite theoretical concepts and that’s not the reality.

What are the determinants of demand, according to economic theory? If you can’t, then I will answer it for you and prove that your objections are based on ignorance of the theory, not the theory itself.

Definition of ‘Econometrics’ The application of statistical and mathematical theories to economics for the purpose of testing hypotheses and forecasting future trends. Econometrics takes economic models and tests them through statistical trials. The results are then compared and contrasted against real-life examples.

Ah good. Glad to hear that you admit you don’t know what the determinants of demand are.

So, what are they?

The determinants of demand are:

Income Consumer preferences Number of Buyers Price of related goods Expectation of future (Source)

These are the things that determine the demand curve. So, your claim that:

“when you look at most supply/demand analyses – they often hold all other variables constant – assuming no effect – then just focus on supply/demand and price but in the real world – it’s much more dynamic and people make decisions on a much wider variety of factors beyond just price and scarcity.”

is objectively wrong. Economic theory takes into all these things in the demand curve. In fact, no economist would say price affects demand, because it doesn’t. Price affects quantity demanded.

Now, I have proven beyond nary a doubt that your claims are not based on problems with the theory, but a lack of understanding what they theory is. However, par for the course, I expect you will scream and shout how “the real world” doesn’t support this and how we’re “only looking at price.” This will be a prime example of how you refuse to look at something that contradicts you; how you’ve already made up your mind. Furthermore, I’d be willing to bet ten pounds that you’ll whip out that Minnesota study with the roads in an attempt to prove me wrong, completely unaware that it is a real life example of supply and demand working.

of course, you could prove me wrong by just admitting your objection was incorrect and withdrawing it, but I doubt you will.

in REAL supply/demand analyses – you have to account for ALL of these factors – and they do not. They typically hold everything constant and assume on the supply side – one commodity and on the demand side – one type of buyer whose only determinate is price.

that’s theory. Econometrics and applied economics is where you actually try to account for things like differences in buyer preferences.

In your make-believe world – everyone who is interest in kumquats has the same view of the desirability of kumquats as opposed to the real world where the buyers of kumquats may well have different subjective views of how much they like them or what kind they are or if there are substitutes, etc.

in your make-believe world – there is just one kind of kumquat and one kind of buyer of kumquats.

variances on either side totally screw up the theory and that’s why you won’t see the theory actually used as-is in real world scenarios.

“However, par for the course, I [Harry Saxon] expect you [Larry the Lunatic] will scream and shout how “the real world” doesn’t support this and how we’re “only looking at price.” This will be a prime example of how you refuse to look at something that contradicts you; how you’ve already made up your mind.

To which, Larry the Lunatic responds:

“ They typically hold everything constant and assume on the supply side – one commodity and on the demand side – one type of buyer whose only determinate is price…In your make-believe world – everyone who is interest in kumquats has the same view of the desirability of kumquats as opposed to the real world where the buyers of kumquats may well have different subjective views of how much they like them or what kind they are or if there are substitutes, etc.

Despite the very fact that what was listed by me were those exact same factors!

Friends, Romans, Countrymen, I submit to you the empirical evidence that Larry is an ideologue and I implore you not to engage him. You will not convert him, only struggle in frustration as he denies what is before his very eyes simply because they are uncomfortable to what he has already determined to be true, exclusive of anything solid or evidence-based.

the part that I do get is that basic theory does not get you far in really understanding real world economics.

it’s a starting point but it comes no where close to real predictive capabilities and for that reason – you seldom see “studies” that actually use real data and when you do, the “theoretical” types immediately talk about the “flaws” as if the basic theory isn’t totally slammed by such things.

“externality” – is damaging other people’s property rights but pretending you don’t know it ….

anything you do – that ends up causing impacts to other property owners – that you don’t have to pay for is an “externality”…

” In economics, an externality is a cost or benefit that results from an activity or transaction and that affects an otherwise uninvolved party who did not choose to incur that cost or benefit”

“the part that I do get is that basic theory does not get you far in really understanding real world economics.”

LOL. You have hilariously demonstrated over and over you do not understand even “basic theory” despite attempts by some very learned people on this blog to educate you.

“…it’s a starting point but it comes no where close to real predictive capabilities and for that reason – you seldom see “studies” that actually use real data..”

The predictive power of economics is very limited at best.. Nobody denies that, but you think you’ve just discovered something new because it’s new to you.

“externality” – is damaging other people’s property rights but pretending you don’t know it ….”

HAHAHA. You STILL don’t understand even though you pasted the defintion you googled:

” In economics, an externality is a cost or benefit that results from an activity or transaction and that affects an otherwise uninvolved party who did not choose to incur that cost or benefit”

It could even be a benefit according to the very definition you linked but apparently can’t grasp. It’s simply a neutral econ term you learn the first week of 101. But because it was introduced to you on this blog, you think it has something to do with capitalist swine dumping arsenic into the water supply.

re: ” It could even be a benefit according to the very definition you linked but apparently can’t grasp. It’s simply a neutral econ term you learn the first week of 101. But because it was introduced to you on this blog, you think it has something to do with capitalist swine dumping arsenic into the water supply.”

it’s usually NOT a benefit but an adverse impact and when it is – it’s not disclosed as such but rather characterized as an “externality”.

and then it’s pretended to be not an adverse impact – an “externality” as opposed to damage to other property rights.

but that’s par for the course for the zealots… theory describes the real world and if you disagree.. then you’re a problem…

“you can’t even plug real numbers into and get good predictive data out of it.”

Next, he’ll be telling us that geometry has no real world uses because it only deals with models and has no way to plug in numbers (conveniently forgetting he spent the past hour talking about trigonometry and calculus).

Using evidence provided by the accused himself, I believe I have laid out my case. I leave it in your hands. I cannot force a judgement upon you but I beg you not to engage this man who has no desire to learn; who is merely a zealot. Nothing good will come from it.

Next, he’ll be telling us that geometry has no real world uses because it only deals with models and has no way to plug in numbers (conveniently forgetting he spent the past hour talking about trigonometry and calculus).

we’re talking about the difference between a basic theory that is conceptual – and using that theory in a real model that can deal with real world data.

“Using evidence provided by the accused himself, I believe I have laid out my case. I leave it in your hands. I cannot force a judgement upon you but I beg you not to engage this man who has no desire to learn; who is merely a zealot. Nothing good will come from it.”

no my evidence. econometrics is a field of applied geometry which zealots like you cannot deal with.

if you actually were honest -you’d admit the difference between the basic theory and the much more difficult tasks of dealing with real data in real world scenarios.

like others here.. you insist the theory is “correct” and that if people acts in ways that contradict the theory that it’s not the theory that is the problem – it’s people acting in ways that “violate” the theory.

said that you cannot use basic economic theory – you have to use applied economics and econometrics to get real world impacts.

the basic theory does other at all other than “illustrate” concepts.

I subscribe to the theories – for as far as they can go but it’s inappropriate – just flat wrong – to try to use them in real world situations. If you really want to get real world results – you have to have models that incorporate in addition to the theory – the other real-word factors that impact the theory.

If you ever watch commercial TV in real-time, (shudder) you will be inundated with recommendations for products that deal with the problem. There is no longer any reason for men to under-perform at work.

even of you are allegedly streaming in hd with 5.1 sound or even what they purport to be dts master, it will not look as good as a blue ray and will not sound half as good.

streaming used compression and this has some real costs in terms of sound. even high end mp3 does not mage very well.

if you are just using a flat panel tv and the speakers in it, then do not give it another thought. you will not notice the difference.

this may just be my a/v wonkery and obsession shining through here, but i have run side by side comps switching back and forth from hd streaming from amazon and a blu ray, and on a big screen and with a solid sound system, the difference is quite noticeable.

i stream a lot of stuff too, love and and would never go back, but i would not rush to write off blue ray and the new 4k stuff is dazzling if you have the ability to show it.

Thanks for the tip. You are right about the quality differences. I haven’t decided against bluray, but much of what I watch is older material not available in hi-def anyway.

I have hundreds of DVDs, but don’t expect I’ll ever have as many bluray disks even if I started using them exclusively, as I expect streaming and purely electronic media will continue to improve over time.

I haven’t seen any of the 4k stuff, but my best screens are 1080P, so it will be a major upgrade to cross that barrier.