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Cardiff Business School

Five insights into why the Gender Pay Gap varies across areas within Britain

Suzanna Nesom, a doctoral student at Cardiff Business School, shares the main findings from her PhD research, which examines gender inequality in labour markets in Britain, its regions and localities, using data from the Annual Survey of Hours and Earnings 2022 (ONS, 2022).*

1. There is considerable variation in Gender Pay Gaps across areas within Britain.

The Gender Pay Gap is simply the difference in average earnings between women and men.

In 2022, the mean hourly Gender Pay Gap for all employees in Britain was estimated to be 15.03%, indicating that men earn 15.03% more, on average, than women.

The Gender Pay Gap can also be negative, which would imply that women earn more, on average, than men. When it is equal to zero, it implies that women and men earn, on average, the same.

This national measure, however, obscures the considerable variation in Gender Pay Gaps across regions and localities in Britain. At the regional level, the same measure varied between 10.19% in Wales to 16.88% in London. There is even more variation at the local level, with the Gender Pay Gap varying between -0.40% in Enfield to 28.92% in Solihull (see Figure 1).

2. This variation is obscured at more aggregate geographical levels.

The national Gender Pay Gap of 15.03 % shows significant gender inequality in the British labour market. However, as shown by Figure 1, the national Gender Pay Gap obscures the variation at the regional level, which in turn hides variation at the local level.

This is because larger geographical regions aggregate data across diverse local areas, which could result in an oversimplified picture of Gender Pay Gaps. Instead, local analysis provides a more nuanced perspective and can deepen our understanding of contemporary drivers of Gender Pay Gaps.

Figure 1: Gender Pay Gaps across regional and local areas.

3. Gender differences in the distribution of individuals working across areas explain most of the variation in Gender Pay Gaps.

It is common to divide the Gender Pay Gap into two parts, explained and unexplained. The explained Gender Pay Gap is the part due to differences in characteristics between women and men and the jobs they do. The unexplained Gender Pay Gap is due to the different treatment of women and men with the same (or very similar) characteristics.

The variation in observed Gender Pay Gaps across areas in Britain is mainly explained by gender differences in characteristics, such as occupation, preferences for part-time work, and job tenure.

These factors explain more of the Gender Pay Gap in areas where it is large, like London and Solihull, and less in areas with small, or negative, Gender Pay Gaps such as Wales and Enfield. In these areas, women have characteristics that are better favoured in the labour market than men. Similar findings have been observed in Germany (Fuchs, 2021) and Northern Ireland (Jones and Kaya, 2021).

4. Unexplained Gender Pay Gaps are relatively consistent in size across areas in Britain.

Whilst explained Gender Pay Gaps contribute to the variation of Gender Pay Gaps across areas in Britain, the unexplained component is relatively consistent in size. This component is sometimes interpreted as a measure of discrimination, but this should be done cautiously as it can also include gender differences in productivity or preferences, as well as unobservable individual and workplace characteristics. For instance, the data does not collect information on whether an individual has children, which may have implications for hourly pay and may have different impacts across areas.

This consistency across areas suggests that areas with lower Gender Pay Gaps aren’t necessarily doing better in terms of gender pay inequality, reflecting similar conclusions found in Northern Ireland (Jones and Kaya, 2021).

5. Unexplained Gender Pay Gaps vary on the basis of local area characteristics.

Despite this relative consistency in size, unexplained Gender Pay Gaps vary on the basis of local area characteristics, particularly in the distribution of employees across industries within a local area. Notably, areas with a higher proportion of employees in the Manufacturing and Construction industries tend to have larger unexplained Gender Pay Gaps. Conversely, areas with a larger proportion of employees in Public administration, education and social work industry have lower unexplained Gender Pay Gaps. This observation potentially suggests the effectiveness of equality duties in reducing unexplained Gender Pay Gaps.

Future research

Suzanna is eager to delve deeper into the determinants of gender inequality in the labour market across different areas of the UK. In the rest of her PhD, she explores whether commuting is also a driver of the Gender Pay Gap in the UK and the impact of the Childcare Offer for Wales on the employment rates of parents (particularly mothers).

Suzanna's PhD is supervised by Professor Melanie Jones and Dr Ezgi Kaya and is funded by the ESRC in collaboration with Chwarae Teg.

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Ms Suzanna Nesom

Graduate Tutor

Email
NesomSM@cardiff.ac.uk

* Material from the Annual Survey of Hours and Earnings is Crown Copyright, has been made available from the Office for National Statistics (ONS) through the UK Data Archive and has been used by permission. Although all efforts are made to ensure the quality of the materials, neither the original data creators, depositors or copyright holders, the funders of the data collections, nor the UK Data Archive, nor the UK Data Service bear any responsibility for the accuracy or comprehensiveness of these materials. This work uses research datasets which may not exactly reproduce National Statistics aggregates.