ILO Working Paper on Occupational Segregation and the Care Penalty in Wage Formation
SDG 5: Gender Equality | SDG 8: Decent Work and Economic Growth | SDG 10: Reduced Inequalities
Ministry of Labour & Employment | Ministry of Women and Child Development
The ILO Working Paper titled ‘Revisiting occupational segregation and the valuation of women’s work’ examines the persistence of gender-based occupational segregation in the U.S. labor market, despite modest integration since 2010. It offers a rigorous re-assessment of how the concentration of women in specific occupations continues to sustain the gender pay gap. Moving beyond simplistic “choice” narratives, the paper argues that women’s work is systematically undervalued because it is often associated with social and emotional “care” skills that are poorly rewarded in the labor market.
The analysis shows that segregation remains pronounced, with an Index of Dissimilarity of 46.8 in 2024. This pattern carries clear economic costs: a one-percentage-point increase in an occupation’s female share is associated with a 0.22% decline in women’s wages and a 0.20% decline in men’s wages.
Key findings from the research include:
The Care Penalty: Occupations involving “relational” or “caring” tasks (e.g., healthcare, education, social work) command lower wages than occupations requiring similar levels of education and cognitive complexity but lacking a care component.
Skill Misclassification: Modern labor valuation frameworks often categorize social and emotional skills as “natural female traits” rather than acquired professional competencies, leading to their exclusion from formal wage-setting mechanisms.
Sticky Floors vs. Glass Ceilings: While high-earning women face “glass ceilings,” the majority of women globally are trapped by “sticky floors” in low-paid care and service sectors where wage growth is stagnant despite increasing productivity.
Impact of Automation: As AI and automation replace routine cognitive tasks, the report warns that the relative demand for human “care” will rise, yet without a policy shift, the economic returns for these essential human-centric jobs will remain artificially suppressed.
Key findings regarding the “Care Penalty” include:
The Remuneration Gap: While social skills command high premiums in sectors like business services (5.8% wage increase per standard deviation), the returns in the care sector are statistically insignificant at 2.3%.
Structural Barriers: Segregation is most acute for workers without a college degree (54.0 index value) and varies significantly by ethnicity, peaking among Hispanic (52.7) and Black (52.3) workers.
Devaluation Drivers: The undervaluation of care is driven by its nature as a “public good,” where benefits like better public health or literacy are difficult for individual workers to monetize through wages.
Automation Risks: As AI automates routine tasks, the demand for human interaction will rise, yet the report warns that market forces alone will not close the gap if care skills continue to be viewed as “natural traits” rather than professional competencies.
What is the Index of Dissimilarity? It is a demographic measure ranging from 0 to 100 that represents the percentage of a specific group (in this case, men or women) that would have to change occupations to reach a distribution identical to the overall labor force. A higher value indicates a more segregated market; the current value of 46.8 indicates that nearly half of all workers are in gender-skewed roles, which perpetuates wage inequalities.
Policy Relevance
The ILO’s findings are a critical warning for India’s “Women-led Development” strategy. With India’s Financial Inclusion Index rising to 67.0, more women are entering the formal economy, yet many remain trapped in the “sticky floors” of undervalued care work. The “Care Penalty” is particularly relevant to India’s 1 million ASHA workers, whose essential social skills are often excluded from formal wage-setting mechanisms. Professionalizing these roles through the National Skill Qualification Framework (NSQF) is essential to ensure that as India’s care needs grow with an aging population, the sector becomes a driver of gender equality rather than a source of stagnant wages.
Follow the full report here: Revisiting occupational segregation and the valuation of women’s work