From “Pin Money” to Careers: Britain’s Late Move to Equal Pay, Its Consequences, and Broader Implications

Abstract

Despite its importance to gender inequality, household incomes, and labor markets, the reasons behind Britain being one of the last major Western nations to introduce equal pay have been relatively neglected. This article first examines the campaign for equal pay from the late Victorian era to its eventual introduction in 1970. Economists predicted that equal pay would produce substantial female unemployment, but policy makers correctly doubted this—as data collected from early adopters in West Europe and North America showed no significant rise in female unemployment. Female employment rose substantially during Britain’s equal pay implementation—while, in contrast to broadly static earnings differentials from 1950 to 1970, there was a significant reduction in the gender pay gap, followed by a longer-term trend of narrowing differentials. This article explores why equal pay expanded female employment, given the absence of any sudden rise in women workers productivity or substantial acceleration of structural change in favor of female-employing sectors. The article finds that equal pay compelled employers to reevaluate the real worth of female workers based on their substantial relative human capital growth since 1945. This had not hitherto been reflected in relative earnings, owing to barriers such as segmented labor markets, monopsonistic employers, and collective bargaining procedures that fossilized traditional gender pay differentials.