The Economic Costs of Men's Long Work Hours for Women: Evidence on the Gender Wage Earnings Gap from Australia and Germany

Abstract

Women's earnings inequality persists, despite policy efforts to reduce discrimination and gender bias. Gender gaps in earnings, however, are a function of hours worked as well as wage rates, and reflect gendered short and long work hour patterns. Within households, how partners exchange time is a crucial driver of hours worked yet this is rarely incorporated into analysis of gender earning gaps. Using a two-stage instrumental variable Oaxaca-Blinder decomposition we model earnings gaps as a function of own and partner hours on and off the job. This enables us to estimate what the gender gap in hours and earnings would look like without a gendered time ‘subsidy’ or ‘borrowing’ in the home. We studied dual-earner households in two countries, Australia and Germany, finding a weekly earnings gap of AUD$536 and €400. This was accompanied by a weekly work hour gap of 12 h in Australia and 13 in Germany. When we accounted for the influence of partner’s hours (paid or unpaid), work hour gaps reduce to 5.1 h in Australian households (58% reduction), and to 6.9 h in German (47% reduction). In effect, women would work 3 to 4 h more each week, and men’s long hours would reduce, narrowing the gender earnings gaps by 43% in Australia and 25% in Germany, if time ‘subsidies’ in the home were eliminated. Our analysis reveals the economic cost to women long work hour cultures impose.