The gender pay gap remains one of the most persistent labour-market inequalities in advanced economies. This article examines the principal drivers of the gap and its implications for women’s career opportunities, synthesizing classic labour-economics perspectives with recent policy evidence on pay-transparency measures. I argue that the gap is multi-causal—rooted in occupational segregation, differences in labour market experience (notably related to care responsibilities), and organisational pay practices—and that recent policy tools such as mandatory pay reporting can help but are not panaceas. The empirical and policy discussion draws principally on two authoritative sources: a seminal analytical review of the determinants of the gap (Blau & Kahn, 2007) and an OECD 2023 cross-country stocktaking and guidance report on pay-transparency measures (OECD, 2023).
Theoretical frameworks and established explanations
Labour-economic accounts of the gender pay gap emphasise several interacting mechanisms. Human-capital explanations highlight differences in experience, tenure and accumulated work-related investments; occupational and sectoral segregation explanations stress that women are disproportionately concentrated in lower-paid jobs and industries; and discrimination—both taste-based and statistical—remains a plausible residual explanation after observable factors are controlled (Blau & Kahn, 2007). Blau and Kahn’s analytical review remains a touchstone because it systematically compares the contributions of these mechanisms and shows that while convergence has occurred on some margins (e.g., educational attainment), substantial unexplained gaps remain after standard controls.
Blau and Kahn (2007) further emphasise institutional and structural features of labour markets—such as wage structures, bargaining regimes, and employer practices—that condition how individual attributes translate into pay. These structural features mean that identical human-capital investments by men and women may yield different returns, particularly when women are over-represented in jobs with compressed pay scales or limited promotion pathways (Blau & Kahn, 2007).
Empirical patterns: distribution, persistence, and drivers
Recent multinational evidence confirms both the persistence of the gap and its heterogeneity across the earnings distribution. Across OECD countries, median full-time female earnings remain systematically below those of men; the OECD reports that “Across the OECD, full-time working women earn 12% less than full-time working men.” (OECD, 2023, p. 12). This headline figure conceals important distributional features—gaps are frequently larger at the top of the earnings distribution (vertical segregation) and interact with part-time work, parenthood and lifecycle interruptions to depress lifetime earnings and promotion prospects for women.
On decomposition evidence, Blau and Kahn (2007) show that occupational and industry sorting account for a substantial share of observed gaps; measured human-capital variables (education, experience) explain part of the convergence over time but not the residual gap. Put differently, much of the remaining difference reflects where women work and how organisations value those roles, not solely lower qualifications (Blau & Kahn, 2007).
Consequences for women’s career opportunities
The pay gap is both a symptom and cause of constrained career trajectories. Lower pay at early career stages reduces women’s bargaining power and savings for career-enabling investments; interrupted employment for caregiving reduces promotion probability and accumulation of firm-specific experience; and organisational cultures that reward uninterrupted, long-hour trajectories disadvantage those with caregiving responsibilities. These dynamics produce a “sticky floor” at lower levels and a “glass ceiling” at senior levels, amplifying representation gaps in leadership and high-paying occupations (Blau & Kahn, 2007).
Because wages determine retirement income and access to financial autonomy, the persistent pay gap also has long-term welfare implications: women are more likely to experience lower pension wealth and greater old-age economic insecurity. The interaction between lower wages, part-time work, and interrupted careers creates cumulative disadvantage across the life course (OECD, 2023).
Policy responses: pay transparency and complementary measures
In recent years, pay-transparency policies (company reporting, equal-pay audits, pay calculators) have proliferated as governments seek to make hidden pay practices visible and subject to stakeholder scrutiny. The OECD’s comparative assessment documents the rapid diffusion of these tools: over half of OECD countries now require private-sector firms to report gender-disaggregated pay statistics, and several countries embed reporting within fuller equal-pay audit regimes (OECD, 2023). The OECD frames reporting as a critical first step—necessary to diagnose inequities and trigger corrective action—but stresses that design, enforcement, and complementary measures determine effectiveness.
Empirically, transparency can reduce unexplained pay differentials by increasing workers’ information and employers’ reputational incentives to act, but it does not by itself eliminate gaps rooted in segregation or unequal care burdens (OECD, 2023). Complementary policies identified by OECD and consistent with Blau and Kahn’s structural perspective include strengthened family-friendly policies (affordable childcare, parental leave for both parents), measures to reduce occupational segregation (training and recruitment incentives), and stronger enforcement mechanisms (sanctions, mandated follow-up action after audits). Together these measures address both information asymmetries and the institutional levers that shape pay returns.
Barriers to effective reform
Several constraints limit the potency of reforms. First, reporting regimes often exclude precarious workers (temporary, part-time, or small-firm employees) who are disproportionately female, thereby underestimating true inequalities. Second, weak enforcement and small penalties blunt incentives for firms to remediate gaps. Third, social norms and household-level divisions of care continue to channel women into shorter, interrupted careers—structural forces not easily remedied by transparency alone. Finally, intersectional dimensions (race/ethnicity, migrant status) mean that aggregate statistics can mask severe subgroup disparities unless reporting is disaggregated (OECD, 2023).
Conclusion
The gender pay gap is a durable, multi-faceted labour-market inequality that both reflects and reproduces constrained career opportunities for women. Classic analytical work (Blau & Kahn, 2007) established the enduring importance of occupational sorting, experience gaps and institutional wage structures; recent policy evidence (OECD, 2023) demonstrates that transparency is an increasingly common and useful tool but one that must be embedded in a wider package—enforcement, family policy, and active measures to reduce segregation—to achieve substantive change. Policymakers and employers seeking to close the gap should therefore combine robust, well-enforced reporting and audit regimes with targeted measures that alter the structural incentives that currently produce unequal pay returns for women’s work.
References
Blau, F. D., & Kahn, L. M. (2007). The gender pay gap: Have women gone as far as they can? Academy of Management Perspectives, 21(1), 7–23.
Organisation for Economic Co-operation and Development. (2023). Reporting gender pay gaps in OECD countries: Guidance for pay transparency implementation, monitoring and reform. OECD Publishing.
