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Latin America's Wage Gap Greater among Top-Earning Women

Friday, February 27, 2015

Despite reductions in the gender pay gap, Latin America continues to have wage discrepancies, especially among its top earners. Currently, men in Latin America make 17 percent more than women of the same age and level of education. That’s down from a 25 percent gap in 1992. Yet, studies indicate the greatest wage difference lies among top-paid positions.

In some cases, it’s a gap that’s widening: for top-paid occupations in Brazil, Chile, Mexico, and Peru, the pay gap was almost twice as great in 2010 as it was in 2000. A 2014 International Labour Organization (ILO) report shows Chilean women in the top income decile make approximately $324 a month less than their male counterparts. The difference is less stark for top-earning Peruvian women, who make around $113 a month less. Nonetheless, Peru daily Gestión reports that the overall wage gap between men and women performing the same jobs is 20 percent.

Some argue differences in candidate qualifications, such as education, are responsible for the shortfall. But Latin American women, on average, have half a year more of schooling than men.

The ILO report attempts to gauge how factors like education determine the pay gap. It breaks down the wage difference in select countries into two categories: explained (observable elements such as years of schooling, experience, and occupation) and unexplained (suggesting social phenomena like discrimination). In Peru, for example, about half of the pay gap for women is explained on average across the income levels. Meanwhile, the pay gap for women in Chile is mostly unexplained, and the proportion grows among those earning in the top 10 percent of women earners.

These unaccounted for gender gaps can deter women from entering the work force, and consequently reduce a country’s growth. An International Monetary Fund (IMF) report released February 23 shows how countries have lost out on GDP growth due to economic gender gaps. In Latin America, seven selected countries (Chile, Ecuador, Guatemala, Honduras, Mexico, Panama, and Paraguay) show estimated GDP losses of at least 15 percent. Equal pay for the sexes is one way to reduce the gender gap and boost women’s economic participation, according to the report.

“It makes economic sense, ” IMF Managing Director Christine Lagarde told Arianna Huffington this week. “It can be, bottom line, much more profitable from a global economic point of view.”   

Watch the Financial Times’ Gillian Tett on Women’s Career Paths: Don’t Succumb to Groupthink