Question

what other pervasive institutional considerations may influence pay inequality

Answer 1

The broader topic of pay inequality can be divided into internal and external considerations. We here discuss about the institutional considerations thus limiting the discussion to the external considerations influencing pay inequality.

Let’s first acknowledge why institution matter with regards to pay determination. Some points to consider are as follows:-

Institutions consist of government regulators which effect the workings of the labor market. Some of the major enactments are minimum wage and overtime wage which tend to prohibit discrimination in employment.

Labour Union

The level of combined negotiations play a pivotal role institutional in resolving the inequality of wages.

Government as a Producer and Regulator

Governments also have an unforeseen effect on the distribution of wages by engaging themselves as producers and regulators, in the product market. It is generally observed that the arrangement of wages is more flattened in the public sectors as compared to the private sector.

It should however be noted that the impact of institutional or market forces is typically targeted in specific parts of the wage distribution curve. For example, the minimum wage affects the bottom portion of the wage distribution, but not the upper portion.

Some pervasive institutional considerations may influence pay inequality are as follows:

Legal policy

There is a major role to be played by law in providing pay equality. Legal mechanisms aimed at minimum wage levels are crucial for a number of reasons, most particularly that women are more statistically more likely than men to be concentrated in minimum wage jobs and in sector where little possibility for labour based unionization.

Collective bargaining and labour unions

The historic views of trade unions have been based on the underlying assumption that males are the sole earners of the family. The women contribution to the family wage is solely to complement the male partner income. Besides, concern over family wage has steered women’s wage presence often concealed and relaxed, omitted from organized employment and collective regulation.

Collective regulation may promote gender pay equity by reducing overall wage inequality and contributing to the transparency of wage structures. However, it may also perpetuate gender pay differences and the undervaluation of women’s work, embedded in traditional differentials between sectors and occupations.

Gender-specific social policy

Across borders, there has been a shift away from a gender-oriented point of view to a family care accountabilities. Gender-specific social policies, include parental leave, childcare, flexible work and work from home arrangements and compensation in social protection for unpaid care work. The nature of the social policy support that a particular state has implications for the overall prices to women conceiving babies and for the distribution of those costs by socio economic class, educational proficiency and labour market dynamics.

Furthermore, without state support for social reproduction the danger is that the higher educated, high social class women will rely on the low wages and subordination of more disadvantaged women for care support.