What is the gender pay gap, and does it exist?

The gender pay gap is the difference in average earnings between women and men. In India, it is large and documented. A 2022 audit found that in states with the most legal restrictions on women’s work, women earn on average 67.7 paise for every rupee earned by men. In states with fewer restrictions, the figure rises to 77.4 paise. The gap is real. The more interesting question is why it exists, because the answer determines what would actually close it.

One explanation is pure discrimination: employers paying women less simply because of who they are. In competitive labour markets, this should be self-correcting. A firm that pays a woman less than her output warrants is offering a discount to any competitor willing to hire her at a slightly higher rate. Over time, discriminating firms lose talent to rivals who do not. In sectors where competition for workers is genuinely intense, gender wage gaps do tend to be smaller. But this mechanism only works when women have access to the same range of jobs as men.

In India, they often do not. Women are legally excluded from night shifts in factories across fourteen states and from twenty-two categories of industrial work. When women are barred from entire categories of employment, they are crowded into a narrower range of roles. More workers competing for fewer positions pushes wages down. The pay gap, in this reading, is largely downstream of a regulatory problem.

Career breaks add a third layer. Women who take time out for pregnancy and childcare accumulate fewer years of experience than men of equivalent age, and less experience typically means lower pay. India’s Maternity Benefit Act mandates 26 weeks of paid leave. But when employers bear the full cost of that leave, it can quietly change who they choose to hire, a point examined in a separate question.

Mandating equal pay without removing the restrictions that crowd women into lower-wage roles treats the symptom while leaving the cause in place.