Sources of pay inequality among women and men

Compensation statistics gathered by different countries demonstrate significant pay gap between men and women. There are two competing explanations for this gap. According to the human capital approach differences in men and women's qualifications and work motivation explain the pay inequality between men and women. On the other hand, there is evidence that gender stereotypes and prejudice play a role in gender discrimination in the labour market. The goal of the current paper is to examine those competing explanations and review their empirical evidence. On the basis of this review we can conclude that the human capital approach does not explain the gender pay gap completely and stereotypes and prejudice affect the compensation of men and women. We also identified several promising lines of future research in this area. peerReviewed publishedVersion