Legalizing Gender Inequality: Courts, the Institutional Construction of Markets, and Unequal Pay for Women

Robert L. Nelson and William P. Bridges

IPR working papers from Institute for Policy Resarch at Northwestern University

Abstract: This paper is the concluding chapter of a book that analyzes the relationship between markets, organizations, and sex-based wage inequality. The cornerstone of the analysis is a set of four case studies of organizations that were sued for sex discrimination in pay, and which included data on between-job wage differences. Here we summarize the results and discuss the implications for theory, policy, and law. The empirical results lend support to an organizational inequality model of gender-based pay differences. Despite significant differences across organizational settings and between the public and the private sector, we find that large organizations mediate between market prices and internal pay levels in ways that contribute to gender-based pay inequality.

The findings have significant policy implications. We suggest that neither the free market nor comparable worth will achieve gender inequality in pay without serious disadvantages. After discussing the experience of various attempts at reform, we propose several changes in law and regulation that will encourage organizations to adopt pay practices that are more rational and fair. Finally, we assert that the fate of the cases we studied reveals the limitations of the law as a vehicle for redressing gender inequality in American society. Plaintiffs made a critical error when they attacked between-job wage differences on the basis that the market discriminated against women, for they posed a false dichotomy between the market and antidiscrimination. But the courts also failed to deal with the issue adequately. After recognizing in principle that between-job wage differences could constitute sex discrimination under Title VII, they then consistently adopted the position that the market, rather than employer practices, was the source of such wage differences. The courts thus gave legal authority to one side of an empirical debate and effectively legalized a fundamental aspect of gender inequality in the American occupational system.

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