In this Insight, the Martin Prosperity Institute continues its investigation into the differences in returns from different levels of educational attainment. While Part 1 Education (Still) Pays, but by How Much? looked at the overall differences, this Insight focuses on the differences in average income according to educational attainment by sex. Today being International Woman’s Day, this insight provides research into the possible undervaluing of women in the workforce due to the large disparity between the average incomes of women compared to equally educated men.
In the previous Insight we found that on average for most additional increments of education, the increase in average income was around $10,000 per increment. The largest gap of$17,037, was discovered between someone with a high school diploma and someone who received a Bachelor’s degree.
The Table below displays the mean annual incomes (In 2010 dollars) for each educational attainment level for men and women. Also displayed in the table is the difference between the mean income at different levels between men and women in dollars and differential percentage. The final column displays the percentage of what women earn to equally educated men.
Exhibit 1: Mean Annual Income for Additional Educational Attainment by Gender
When looking at the Men column, there is a drastic difference between the average yearly wage of someone without a high school diploma and someone with a PhD ($55,198 difference). As educational attainment increases for a man the average income steadily increases. The largest jump in average income for men is between a high school diploma and a Bachelor’s degree ($28,476). Second largest jump is from College to a Bachelor’s degree ($16,144).
Just like with men, the difference in average income between a woman with less than a high school diploma and a woman with a PhD is quite large as the woman with the PhD makes just over four times more ($45,879 more). Women, on average, also make more as their educational attainment level increases. The highest jump was once again between a high school diploma and a Bachelor’s degree ($18,663). One interesting finding was that women with some college training earn only an average of around $3,600 less a year than a woman that has completed her College degree.
While for both men and women, additional educational attainment generally leads to greater annual income, the increase is not equal between both genders. On average on all levels of educational attainment, men make more than women. The disparity was found to be anywhere from $10,622 less per year to $25,759 less per year in wages. The income disparity is no more apparent given that men with only a high school diploma make more than women with a College degree by $4,000 a year. We can break down the differences in average annual income into educated (College degree and above) and non educated (less than College degree). When looking at educated men and women, on average men make around $20,000 more per year. Generally as educational attainment increases so does the absolute income of men over women, but the percentage difference is stable or decreases. The largest gap was found to be between a man and women with a Masters degree. Until looking at the PhD level, all other levels of higher education, the difference in wage was around 54%. It was also found that outside of individuals with a PhD, women earned roughly only 64% of what equally educated men earn.
The table displays that the most significant disparity between men and women is when looking at average income along the lowest levels of education. As discussed in many scholarly articles, women who work in low wage, part time service jobs generally make the least amount of money. Our table possibly supports this, as women with a high school diploma on average earn a differential in wage to men of 58.9%. The largest disparity is when looking at men and women at the lowest level of education. Women with less than a high school diploma on average make $10,622 dollars less annually than equally educated men. That attributes to an income differential of 72.9% as women with less than a high school diploma only make 55.8% of what equally educated men earn.
As the table displays, on average the returns to education are greater for men than women. When deciding whether to attain further education or not, the decision seems to be more profitable for men. While different programs have different tuition fees and lead to different careers, tuition is the same price for women as men. With a greater average return from higher education for men, their further educational attainment is “worth” more. When factoring in tuition costs( which average $5,000 a year for a BA in Canada) , on average a man would be able to pay off his four year tuition debt in one year with the $22,759 more that he would make annually than an equally educated women.
In the prior Insight field of study and place of study were highlighted as factors that can greatly influence the value of further educational attainment. These once again are two very important factors in the wage differential between men and women. Depending on the field of study and place of study, the prospect of attaining further education is once again on average more beneficial to men. When factoring in the living costs a student that goes to school away from home, the impending debt seems more manageable with the average male salary than with the female wage. This is because if using the averages, it would be possible to pay off the student living debts quicker by a man. Field of study is also once again an important factor that a student must consider. As indicated, on average men make more than women with every level of education, but in some cases it would be still attractive for a woman to gain further training. The disparity between a female college educated health care worker would be different from a female doctor with a medical degree. Many work experience based jobs that require less formal education such as certain trades are unavailable for most women and therefore there are less decent paying occupations for less-educated women than men. These results though, do not mean that the disparity in wages is the same within any specific field of study.
While the table displays that men on average make more than women on every level of educational attainment, there is obviously still value for women to increase their level of education. As shown, women with lower levels of education do not earn a good wage and are on average the lowest paid of all workers. Women without a high school diploma on average make $13,408 a year which may be attributed to part time unreliable/unstable service work. As the educational attainment level increases women on average have higher incomes. Men at the lower levels of education make much more than women (79.2% more for less than high school men), as on average less-educated women have extremely low incomes ($13,408 LTHS). Using the Canadian Low Income Cut-Off and the Low Income Measurement, the average income for women with LTHS falls below the low income line. Both measurements change based upon number of parents and number of children, for single mothers with one or multiple children, the average wage of $13,408 falls far below the Low Income Line . As women are more educated the gap in income between them and equally educated men is smaller.
There are many potential factors that could explain why the gap between average incomes for men and women is so wide. These include time taken off for child bearing that could have led to further job experience and promotions, having to only work part time hours due to young children (even if the woman has a high level of education) and other factors. Nonetheless our table displays that the returns to education in dollars for men on average is greater than for women. These numbers though are just averages and field of study and place of study are still important factors in determining the benefits of further education. Overall though, the value of education is just as high for women as the decision to not receive further education could have more drastic outcomes as un-educated women on average have the lowest annual incomes by a drastic amount.
To read more about the information provided in this insight, please take a look at Dr. Kevin Stolarick’s working paper: The Changing Returns to Education in Canada and Its Provinces: 1971–2006. Along with Marc Frenette’s study: Access to College and University.
*With apologies to the author of Eats, Shoots and Leaves.
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.