Why are women paid less than men? New research in South Africa shows the company you work for makes the biggest difference

By Ihsaan Bassier and Leila Gautham

Why do women earn less than men? The usual suspects – occupation, hours, experience – explain some of it. But a powerful, often overlooked reason is simply this: where women work. The companies that hire them play a huge role in shaping their lifetime earnings.

South Africa has a severe gender pay gap, much of which is unexplained by worker characteristics such as occupation, skills or experience.

In our new study published in the Journal of Development Economics, using tax data on the universe of formal workers in South Africa, we uncover a striking fact: nearly half of the gender pay gap in South Africa is explained by women working at lower-paying companies than men. That is, more women tend to work at companies that pay all workers less.

In addition, this phenomenon evolves dramatically over a woman’s life.

We tracked millions of workers between 2010 and 2018 using tax data. We