The gender pay gap is a condition where women receive relatively less pay or wage compared to men while engaged in similar or comparable work. The literature on the gender pay gap has shed light on a number of factors that explain it. Particularly, human capital theory has helped explain how investment in education, work experience, and work-related trainings contribute to the existing gender pay gap. This theory highlights how human capital factors materialize into workforce productivity and into benefits for those that possess them. Today, however, gender differences in human capital rarely explain the persistent gender pay gap. This is because women are increasingly acquiring the necessary human capital to be competitive and productive in the workforce.
In addition to human capital factors, the literature on the gender pay gap explains that gender -based occupational segregation contributes to the pay gap. Gender based occupational segregation is when women are concentrated in certain occupations, particularly those that produce lower economic return. The pay gap induced by occupational segregation persists among women in management positions.
The gender pay gap is also reinforced when socially constructed gender role expectations shape the value society assigns towards skills women bring to the workforce. In this context, regardless of the skill sets women bring to the workforce, they encounter gender based workplace discrimination that partly manifests in women receiving lower wages compared to their male counterparts. Such biases surface during negotiations throughout hiring and promotion processes. Negotiation theory that looks at this process through the gender lens suggests that socially constructed gender roles result in differing behavioral expectations for men and women. This theory notes that when women assertively engage in wage negotiation, it backfires on them, while the same process produces different outcome for men in the workforce. As a result, the negotiating power of women is limited and contributes to the wage gap.