On International Women’s Day last week I posted some highlights from World Bank Group studies regarding the ways in which Mongolia’s legal and institutional environment treats men and women differently, as well as some outcomes in terms of how female-led SMEs see their environment differently from male-led SMEs. As a whole, the legal environment provides for equal treatment for women and men, with some exceptions related to employment restrictions and the retirement age. Women and men both face challenges in running their businesses, but female-led SMEs tends to face difficulties accessing credit, despite strong repayment records.

Following a post on the minimum age for marriage (18 in Mongolia) drawing on the WBG’s Women, Business, and the Law database, a reader pointed out that while legal provisions might look good, there is still a large gender pay gap in Mongolia. This prompted me to look again into our labor market studies, including one that looks specifically at gender disparities in the labor market in Mongolia.  The findings and analysis are interesting, so here is a summary of some of the key results that inform an understanding of the gender pay gap in Mongolia. (With numbering following the tweet storm.)

13/ There are large gender differences for some occupations. To the extent that different occupations draw different salaries, this is one factor that can contribute to a aggregate difference in salaries among women and men.

14/ There are large differences in labor force participation among men and women in Mongolia. This is true regardless of the level of education, although the gap is smaller among those with university or higher education.

15/ The differences in retirement age for men and women in Mongolia contributes to differences in earnings and opportunities. (This follows a theme of the earlier post.) Here is how the study summarized the issue:

“What is evident though is that relatively fewer women reach higher level managerial positions. For example, women tend to account for one-fifth of director and executive director positions in the 2009 Labor Force Survey and are overwhelmingly concentrated in mid-low level managerial and support staff positions both in the public and private sector. While other factors may also important, such as gender discrimination in the workplace, early retirement may also be one contributory factor.”

Ultimately, the difference in retirement age means that a substantially larger segment of the female population is not economically active than for the male population.

16/ Understanding the gender pay gap is complex. It can be driven by many factors, including occupational differences, productivity differences, lifestyle choices, and discrimination.  For more on the international research listen to this great podcast interview with Harvard’s Claudia Goldin.

In Mongolia, though, how much of the gender pay gap can be explained by observable characteristics? The short answer is: Not much! After controlling for observable characteristics (occupation, education, age, etc.), very little of the difference in pay between men and women is explained.

17/ In fact, given women’s high educational attainment in Mongolia, they should be earning more than men based only on characteristics. Here is how the study summarizes these findings:

“A decomposition of the wage gap indicates substantial differences in treatment of women and men by employers in Mongolia’s labor market. Wage gaps can be disaggregated into “explained” and “unexplained” portions. The first is that part of the wage gap that arises from differences in the average characteristics of men and women (e.g. in productivity, schooling or tenure). The ‘unexplained’ portion measures the effect of unobserved characteristics between the sexes (e.g. motivation or ability) but is sometimes taken in the literature as evidence of discrimination, namely that the market rewards women and men differently given observably identical characteristics.”
…
“Decomposing the gap however suggests that the overwhelming bulk of it is due to the fact that the market values men and women’s work differently rather than due to differences in observed characteristics. In fact, if they were paid in the same way as men, based on the characteristics that are observed, women would earn more than men because they have better characteristics than wage working men. Only among older workers do differences in observed characteristics help to explain a small portion of the gender wage gap.”