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Gender pay gap closes by one fifth after reporting introduced

The gender pay gap is closing – this research shows that making employers accountable for their pay gaps can result in significant changes to pay.
- Jack Blundell
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Gender pay gap reporting in Britain is making a difference. New research reveals that employers affected by the legislation have narrowed the wage gap between women and men by almost one fifth (19%) on average.

Research from the Centre for Economic Performance (CEP) at the London School of Economics and Political Science, also shows that, on average, women looking for work would be willing to accept a 4.9% cut in salary to avoid an employer with a big gender pay gap. There appears to be no impact of gender pay gap reporting on men’s willingness to take a job.

Jack Blundell, author of the new study – Wage responses to gender pay gap reporting requirements – said: “The gender pay gap is closing – this research shows that making employers accountable for their pay gaps can result in significant changes to pay, with employers narrowing their pay gaps to attract and retain workers. But the reporting policy has room for improvement, particularly around enforcement, and it remains to be seen whether these effects outlast the initial media interest in gender pay gap reports.”

Using data from the Office for National Statistics, the research draws on a sample of private and public sector employees – in this sample, the baseline mean gender gap is 8.6 percentage points.

The analysis of changes in the gender pay gap between organisations that were just below and just above the 250-employee cut-off point for reporting reveals that where the reporting requirements were in place:

  • The policy led to a 1.6 percentage point increase in women’s hourly wages relative to those of men – which means that the gap was closed by about 19% in these companies.
  • The effect was not driven by highly paid women moving in or low-paid women leaving, but due to changes in individual workers’ wages.
  • The effect was driven primarily by men at employers who had to report the gender pay gap experiencing slower wage growth than those at comparable organisations not covered by the reporting policy.

The research report also contains details of a separate survey of 1,840 workers carried out in the summer of 2020. This reveals that while women are prepared to take a pay cut to work for an employer with a lower pay gap, men are not.

Women are more likely than men to think that gender pay gaps are due to more men being in senior positions together with women workers being more likely to have childcare responsibilities. In contrast, men are more likely than women to say that pay gaps are due to workers having different jobs within an organisation.

From 2017, employers in England, Wales and Scotland with a headcount of 250 or more employees must publish annual figures about their gender pay gap. The regulations were suspended in 2020 and have been re-introduced in 2021, but with a six month deadline extension.

The full study is available here: Wage responses to gender pay gap reporting requirements

 

Behind the article

The Centre for Economic Performance (CEP) is an independent research centre based at the London School of Economics and Political Science. Its members are from the LSE and a wide range of universities within the UK and around the world.

 The Centre for Economic Performance is part-funded by the Economic and Social Research Council, part of UK Research and Innovation (UKRI) https://esrc.ukri.org/  https://www.ukri.org/

About the author:

  • Jack Blundell is a PhD candidate at Stanford University and a research assistant at CEP. j.r.blundell@lse.ac.uk

For more information contact:

  • Helen Ward, communications manager, CEP: 07970 254872, h.ward1@lse.ac.uk
  • Romesh Vaitilingam, press and public relations, CEP: romesh@vaitilingam.com