{"id":8640,"date":"2025-05-09T17:51:53","date_gmt":"2025-05-09T15:51:53","guid":{"rendered":"https:\/\/www.rivistaeco.com\/?p=8640"},"modified":"2025-05-09T17:51:53","modified_gmt":"2025-05-09T15:51:53","slug":"how-aging-affects-the-gender-pay-gap","status":"publish","type":"post","link":"https:\/\/www.rivistaeco.com\/en\/2025\/05\/09\/how-aging-affects-the-gender-pay-gap\/","title":{"rendered":"How Aging Affects the Gender Pay Gap"},"content":{"rendered":"

Wage data reveal two key disparities: one by gender and one by generation. In all advanced economies, including Italy, the gender pay gap has narrowed over the past fifty years\u2014at least until the 2000s\u2014while the generational wage gap has widened. Male and female wages have converged\u2014but largely because young men\u2019s conditions have worsened. They are no longer reaching top positions in firms, which remain firmly held by older workers.<\/em><\/p>\n

 <\/p>\n

Over the past fifty years, two major trends have shaped labor markets in advanced economies. First, the gender pay gap has steadily decreased since the 1970s\u2014rapidly until the early 2000s, then more slowly. Second, younger workers (under age 35) have seen their career prospects deteriorate relative to older workers (over age 55). In Italy, the generational wage gap has nearly doubled since the 1980s; in the United States, it has grown by more than 60%. Younger people are now less likely to be promoted or reach senior positions, and their lifetime earnings have declined.<\/p>\n

How Aging Shrinks the Gender Pay Gap<\/strong><\/h3>\n

Though these trends might seem unrelated, both are closely tied to population aging and an aging workforce. Aging has played a crucial role in reducing the gender wage gap\u2014but at the cost of worsening conditions for younger workers, especially men.<\/p>\n

The key mechanism linking workforce aging to the narrowing gender pay gap lies in corporate hierarchies. Many firms have limited capacity to create new senior roles. When a company doesn\u2019t grow\u2014and growth has been sluggish in Italy\u2014there are fewer leadership roles available for promotion. Executive roles also require firm-specific skills and trust built over time, making them expensive to add. As populations age and retirement ages rise, older workers stay in top positions longer. This “hierarchical congestion” has reduced opportunities for younger employees to rise\u2014disproportionately affecting men, who in the past had better access to high-paying roles than women and therefore had more to lose.<\/p>\n

Generational Dynamics<\/strong><\/h3>\n

Data confirm this dynamic: the narrowing gender pay gap is mainly due to differences between cohorts<\/em> (groups of workers born in the same year), not to uniform improvements across all generations. The chart below illustrates the gender pay gap in weekly wages across birth cohorts in Italy from the time they enter the labor market (set at age 25). For those born in 1951, the entry-level gender pay gap was 21%\u2014roughly twice that of those born in 1966 and more than triple that of those born in 1991. The overall decline is entirely driven by cohort effects. Within each cohort, the gender pay gap actually increases: for the 1951 cohort, it widens by almost 7 percentage points over time.<\/p>\n

The chart also shows another important insight: the convergence of entry-level wages between men and women stopped around the mid-1990s. Since then, the entry gap has stabilized between 7% and 9%.<\/p>\n

 <\/p>\n

Gender Pay Gap Between and Within Cohorts<\/strong><\/p>\n

\"\"
Note: The chart shows the average gender wage gap (mean difference in the log of weekly wages between men and women) across different birth cohorts in Italy, indicated in the legend. Red triangles show the average gender wage gap across all cohorts in the labor force each year. The analysis includes only workers aged up to 50 to minimize cohort variation due to retirement. Data source: Uniemens, Italian National Institute of Social Security (INPS).<\/figcaption><\/figure>\n

 <\/p>\n

Young Men Locked Out of Leadership Roles<\/strong><\/h3>\n

Why did men\u2019s and women\u2019s wages converge from the 1970s to 1990s? This is where workforce aging and hierarchical congestion come into play. Similar patterns are seen in the United States, Canada, and the UK\u2014implying that global factors are at work, not just country-specific ones.<\/p>\n

The data show a sharp decline in the share of managerial roles held by young people\u2014entirely at the expense of young men. In 1976, 1.8% of managerial roles in Italy were held by 25-year-old men. By 2019, that number had dropped to 0.4%. For young women, the rate stayed stable or even improved slightly\u2014from 0.1% to 0.2%.<\/p>\n

Wage distribution data tell a similar story. Imagine ranking all workers in a given year into 100 wage percentiles. In the 1970s, young men entered the workforce around the 47th percentile on average. Today, that has dropped to the 33rd. For women, the decline was less dramatic\u2014from the 33rd to the 27th percentile. Notably, during the period when the gender gap at labor market entry was narrowing (until the mid-1990s), men\u2019s outcomes deteriorated more sharply than women\u2019s. Over the last twenty years, trends for both have moved in parallel.<\/p>\n

These patterns exist across all firms but are strongest in those with higher average wages\u2014firms where older employees are most concentrated and where delayed retirement reinforces the “blocking” effect. These results don\u2019t deny progress for women in terms of participation rates\u2014but the narrowing gender pay gap at entry mostly reflects declining male wages.<\/p>\n

 <\/p>\n

Young Workers\u2019 Position in the Wage Distribution<\/strong><\/p>\n

\"\"
Note: The chart shows the average wage percentile for men and women at age 25. Each year, data include all private-sector workers aged 25\u201364 who worked at least 24 weeks, earned positive wages, and were not retired on December 31. Data source: Uniemens, Italian National Institute of Social Security (INPS).<\/figcaption><\/figure>\n

 <\/p>\n

Education Choices Matter Too<\/strong><\/h3>\n

Why has wage convergence stalled over the past 20 years? Likely because the aging-and-blockage mechanism no longer disadvantages only young men. With smaller initial gender differences in roles, men now have less to lose. Top corporate positions are essentially off-limits to all young workers\u2014diluting the congestion effect.<\/p>\n

At the same time, the remaining gender pay gap\u2014especially among college graduates\u2014cannot close unless men and women pursue similar degrees. Women remain underrepresented in high-paying STEM fields. As a result, about half of the current entry-level gender pay gap stems from differences in educational choices. Reducing the gap will require addressing these disparities in study paths.<\/p>\n

Looking Ahead<\/strong><\/h3>\n

Will the gender pay gap continue to close or widen in the future? The evidence offers some guidance. So far, the narrowing gap has been driven mainly by cohort convergence\u2014a trend that has now slowed, if not stopped. In the future, the gap may at best stabilize at current levels as older cohorts retire. In other words, without structural changes in the economy, the gender pay gap is unlikely to disappear in high-income countries within a few decades\u2014as some estimates, such as those by the World Economic Forum, suggest. Ignoring these dynamics risks diverting policy attention from the areas where gender inequality can actually be reduced.<\/p>\n

 <\/p>\n

Jaime Arellano-Bover is a lecturer and Senior Research Scientist at Yale University. He specializes in labor economics, human capital, and immigration.<\/em><\/p>\n

Nicola Bianchi is a professor in the Strategy Department at the Kellogg School of Management, Northwestern University, and an affiliated researcher at the National Bureau of Economic Research. His research focuses on labor and human capital economics.<\/em><\/p>\n

Salvatore Lattanzio works in the Families and Labor Market Division of the Economic Structure Department at the Bank of Italy. His research interests include labor and gender economics.<\/em><\/p>\n

Matteo Paradisi is a professor of economics at the Einaudi Institute for Economics and Finance (EIEF) and teaches at LUISS University. He works on labor and public economics.<\/em><\/p>\n

 <\/p>\n

The views expressed are personal and do not represent those of the Bank of Italy or the European System of Central Banks.<\/em><\/p>\n

 <\/p>\n","protected":false},"excerpt":{"rendered":"

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