THE article in Saturday’s Bendigo Advertiser “Agency ‘oversimplified’ gender pay data, says GCA” reported that new male university graduates were being paid more than new female graduates.
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It was suggested that CEOs were somehow responsible for this in their firms.
It is not that simple.
One could have a situation where, in every firm, women were paid more than men, yet overall, men would earn more.
Suppose that we have only two firms, A and B.
Firm A employs 20 females who are paid $50,000 per year, and 10 males who are paid $45,000.
Firm B employs 10 females who are paid $80,000 per year, and 20 males who are paid $75,000.
In each firm, women are paid more than men.
Yet overall, the 30 females earn an average of $60,000 per year, and the 30 males earn an average of $65,000 per year.
In mathematics, this is called Simpson’s paradox.
Terry Mills,
Quarry Hill