Human Capital Models and the Gender Pay Gap

This paper provides a commentary on the article by Lips ( 2012 ), “The Gender Pay Gap: Challenging the Rationalizations, Perceived Equity, Discrimination, and the Limits of Human Capital Models.” It provides some economic background for human capital models that try to explain gender pay gaps, and discusses the limitations of the models. It assesses some of Lips’ criticisms of the model. In contrast to Lips, the author believes that human capital theorists are generally aware of the limitations of their models, and she believes that human capital models make a valuable contribution to the literature on the gender pay gap. The author also uses her own research to illustrate how human capital variables can be combined with variables from psychology and other fields to try to understand the salary differences between men and women in specific professions. The Appendix provides a list of some 2011 and 2012 studies that examine gender differences in pay in various countries and the types of data used.