Gender Differences in the Labor Market: Wages and Employment Polarization

Executive Summary

The wage gap between women and men in Israel’s labor market stood at 35% in 2016. This gap has been studied extensively, and opinions differ as to its source; some attribute it to discrimination against women, while others maintain that the gap is rooted in essential differences between the genders and in their differing occupational preferences.

This study finds that most of the wage gap can be explained by differences in the individual characteristics of employees in the Israeli labor market: namely, differences in work hours, occupations, and mathematical achievements.

Differences in work hours

The most influential factor in explaining the gap is the disparity in working hours between men and women: differences in work hours were responsible for 57% of the wage gap in 2010-2011.

• In 2015, 34% of working women aged 25-54 were employed part-time, versus 17% of men. Even among those with full-time jobs, women work fewer hours than men: averaging 43 hours a week, compared to 47 hours on average for men (2015).
• Among full-time employees in Israel, the difference in work hours between men and women is among the highest in the OECD.
• When examining the hourly wage gap in Israel, the gap is similar to that of other OECD countries – standing at 16% in Israel, compared to an OECD average of 15% (2014).

Differences in occupations and industry of employment

Differences in the occupations pursued by men and women account for another 14% of the gender wage gap in Israel.

Although women pursue academic education at higher rates than men, there are significant differences in the fields men and women tend to study, which is later reflected in jobs and wages.

• In all academic degree programs, women account for more than half of students, but they tend to study therapy and education-related fields. In contrast, men comprise the majority in the mathematical and scientific disciplines, which are associated with higher average salaries.
• The share of female students in technology fields rose slightly with the years, yet remains low at only 20%-30%. In 2014, for example, only 27% of students in mathematics, statistics and computer science majors were women.
• Even among female graduates with a degree in computer science, a relatively high percentage of women do not go on to work in this field.
• While the wage gap is almost nonexistent in the field of education, in industries such as medicine and engineering, the gender wage gap is higher than 20%.

Lower level of achievement in mathematics

The study shows that mathematical abilities have a definite effect on wages, and on the gender wage gap.

• Women’s lower achievements in math are discernible from a young age: among Jewish Israelis, girls’ achievements on the Grade 5 GEMS exams in mathematics are lower than those of boys (though girls outperform boys in English), while on the PISA tests their achievements are lower in math and higher in reading. In high school fewer girls study math at the 5-unit matriculation level, and their average score is lower.
• Although women have a higher matriculation average than do men overall, five units of mathematics study and the quantitative portion of the psychometric exam have a relatively large influence on wages, and women tend to have lower achievements in these spheres.
• In high school elective study majors, female students make up less than 40% of the students in subjects like computer sciences (33%) and physics (37%) whereas they make up more than 60% of students in subjects like art (83%) and literature (79%).

Possible approaches to reducing the gender wage gap

Given the findings of the study, it appears that, in order to reduce wage gaps, it is important to raise awareness of the impact that choice of academic field has on wages. Additionally, the relationship between mathematical ability and wages highlights the need to promote programs that encourage women to study scientific subjects at a high level, beginning from an early age.

Another reason why women might not be entering technological occupations, which are considered both prestigious and high paying, is the long work hours in these fields, with little opportunity for flexible hours. Offering work-schedule flexibility and shorter work days to both men and women in these fields would enable women to enter more lucrative occupations and reduce overall gender wage inequality.

This paper appears as a chapter in the Center’s annual publication, State of the Nation Report 2016, edited by Prof. Avi Weiss.