wage gap concept, blue figure symbolizing men and red pawn women,

Wage gaps between men and women aren’t just a function of labour participation rates. They’re also driven by differences in the gender mix of particular industries, says new research from from S&P Global Ratings.

In a new report, the rating agency examines the factors underpinning pay disparities between men and women in North America, concluding that differences in the allocation of labour to certain sectors, and the underlying productivity of those sectors creates implied wage gaps of 10% to 20%.

Among other things, the research finds that certain capital-intensive sectors, such as mining and manufacturing, which generate high output per worker, have higher shares of male workers; whereas industries that are less capital intensive (and therefore generate less output per worker) such as education and recreation, have higher shares of female workers.

As a result, the gender wage gap is driven by the differences in gender distribution across various sectors.

According to the research, in Canada, the gender gap in average output per worker was over $23,000 in 2019 (the study uses pre-pandemic data to avoid distortions that arose during that period).

“As in the U.S., there is a stark divide between employment in capital-intensive industries, mostly dominated by men, and labour-intensive fields such as health care and education, where women make up the largest share,” the report noted.

The implied wage gap for Canada is largest in North America at 22.4%, followed by the U.S. at 20.6%, and Mexico at just 9.9%, the report noted.

Following these findings, the report said progress in reducing the wage gap “requires addressing the labour supply imbalance across sectors.”

At the same time, it noted that there’s no reason to pursue strict equality as the goal, given that men and women may justifiably have different preferences to work in various sectors, and the research only assesses the economic output of these sectors, it doesn’t consider the social value of that work.

“For example, we cannot compare the societal value of a worker in the mining sector versus a worker in the education sector. The societal value may differ, perhaps substantially, from the market value,” it noted.

That said, it also concluded that addressing the gender disparities across sectors is needed to reduce gender wage gaps.

“Rather than have equality as a goal, a more fruitful approach would be to attack any biases or structural impediments that prevent both women and men from reaching their full potential,” it said.

“Institutionalized notions that girls and boys should have different career paths are ripe for change. More proactive options include encouraging and supporting young women to go into fields that are historically heavily skewed toward men,” it said.