Exploring the Gender Wage Gap in Canada: Occupational Typology Influences Women’s Labour Force Participation

Researchers at the Martin Prosperity Institute are presently engaged in comprehensive research that seeks to describe Florida’s occupational typology in Canada in greater detail using the most recent and available Census data (2006). This exploratory project examines several facets of the Canadian labour force, one of which is variation in the occupational classes by sex.

Gender Income Differences in Canada

Our examination of the income differences between males and females in Canada initially began by simply comparing the median income of each of the sexes by CMA. While one would expect some sort of differential to exist, and likely hypothesize that Canadian men earn more on average than Canadian women, we sought to account for the variables that affect present earning patterns. We employed variables that normally would be used in the Mincer equation, such as education, hours worked, and occupational structure using aggregate, not individual level, Census data. Based on these, and given the low number of observations, we only ran bivariate correlations. We are aware that correlation does not equal causation; we are merely highlighting the nature of relationships present in the data and in turn, describing them to the best of our ability.

Class Composition Affects Labour Force Participation by Gender

In examining the creative and working classes by CMAs, we are referring to the composition of these two classes in a CMA labour force. To provide a baseline for reference, in Canada the occupational breakdown by class is: 46% service class, 29% creative class and 21% working class. Exhibit 1 provides the occupational breakdown of each CMA into the occupational classes. This breakdown will help to interpret Exhibits 2 and 3 below, which examine the relationship between female full time labour force participation and share of workforce that is either working class (Exhibit 2) or creative class (Exhibit 3).

In examining the bi-variate correlations for Canadian CMAs, we find that where there is a larger share of creative class workers, women earn more (.588**). Conversely, where there are more working class workers, women earn less (-.413*). One hypothesis may be that in areas where there are more creative class workers, more women work full time, and more hours worked usually means higher income.

Exhibit 1: Occupational Class Breakdown by CMA

Labour Force Participation Rates Vary by Sex and Occupational Typology

Our analysis led us to focus on examining how occupational structures relate to the hours worked, and thus income. The results identified labour force participation, represented as the relationship between female full time work, and share of the labour force that is in the creative and working classes, to be significant. In particular, the labour force participation of women in the creative and working classes could be one explanation why women earn less in working class regions, and more in creative class regions. It should also be noted that this relationship did not hold true for the service class, where class income for women was not significantly affected.

Exhibit 2: Female Full Time Share in Working Class CMAs

As will be demonstrated in Exhibits 2 and 3, for women, the underlying occupational class structure most probably affects outcomes for women’s participation in the labour force.

In examining working class Canadian CMAs, there is a negative and statistically significant relationship between the working class share and the share of women who work full time. This relationship suggests that in CMAs where there is a large working class population, women’s full time share in the labour force decreases which may be a reason why average income in these regions is lower.

Exhibit 3: Female Full Time Share in Creative Class CMAs

In CMAs where the labour force has a larger composition of the creative class women’s full time participation in the labour force increases. In these more creative CMAs, women are more likely to work full time, which in turn increase the regional median income level. Interestingly, the composition of the labour force is not related to male incomes in a way that is statistically significant. Which is to say, that — uniquely — females tend to make more money overall and work full time in cities with a high share of the creative class. There is more variation for women than men with respect to the share of the labour force that works full time.

These findings reinforce the notion that when it comes to understanding the income gap between the sexes in Canada, class matters.

An in-depth exploration into women in the creative class in the United States by Richard Florida, Charlotta Mellander and Karen King will soon be available in a forthcoming MPI publication, The Rise of Women in the Creative Class. The report uses American data to compare labour force composition at various geographies in order to describe the challenges and opportunities inherent to creative class women.

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The Martin Prosperity Institute at the University of Toronto’s Rotman School of Management is the world’s leading think-tank on the role of sub-national factors—location, place and city-regions—in global economic prosperity. We take an integrated view of prosperity, looking beyond economic measures to include the importance of quality of place and the development of people’s creative potential.