Overschooled and underpaid: The riddle of opposing gender gaps in pay and education

The gender pay gap has decreased over the last two decades, but change has been gradual, which points to a structural labour market challenge, as higher female participation has not translated into equal pay. Women in the EU in 2023 earned 12 % less per hour than men on average, with greater earnings gaps when measured over weeks, months or years due to differences in working time patterns. At the same time, there has been a growing gender gap in educational attainment levels. This gap has been going in the opposite direction. Young women have been outperforming young men in most levels of formal education; a majority of those graduating in every EU Member State in 2024 were women. Given the traditionally strong correlation between educational attainment and subsequent earnings, the question arises: why is the gender pay gap contracting at a relatively modest pace when newer cohorts of women are increasingly better qualified than their male counterparts? This report describes recent trends in the gender pay gap and gender education gap, presents some of the research that seeks to account for these gaps and looks at the role of gender differences in third-level field of study choices that may be contributing to the persistence of the pay gap. 

The principle that women and men should receive equal pay for equal work has been enshrined in EU treaties since 1957. Closing gender gaps in the labour market has also been one of the main objectives of the 2020–2025 EU gender equality strategy, the European Commission’s 2025 roadmap for women’s rights and the European Pillar of Social Rights. The 2023 Pay Transparency Directive obliges employers to use objective and gender-neutral criteria for determining pay levels and career progression and requires larger companies to report on their gender pay gaps and take corrective action if their gender pay gap exceeds 5 %. Closing gender gaps can be achieved. Even with a less supportive policy framework in education, gender gaps in educational attainment have narrowed, closed and then reversed over the last three decades. 

• The gender pay gap in average gross hourly earnings at the EU level has been decreasing gradually – from 15 % in 2010 to 12 % in 2023. 

• Gender pay gaps are highest in well-paid jobs and among those with higher qualifications. Male graduates in the EU earn 22 % more than their female counterparts; the equivalent gap for non-graduates is 11 %. 

• Since 2010, the female share of those graduating from university has surpassed the male share, and the gap is widening. There is now an 11-percentage-point difference in tertiary education completion for those aged 30 to 34. Women represent 54 % of the 87 million tertiary graduates in the EU aged 15 to 64. 

• Labour market returns for education are much weaker for women than for men. Education-adjusted gender pay gaps are bigger in nearly every Member State than the unadjusted gender pay gap, reflecting superior female educational performance. 

• Female graduates are less likely to apply their qualifications in paid employment. In 2023 there were 4.7 million jobless female graduates of core age (25–54 years) in the EU-27, compared with 2.2 million jobless male graduates. 

• A contributing factor to gender pay gaps is occupational segregation – concentrations of men and women in specific jobs in the labour market, with wage penalties for female-dominated jobs and undervaluation of female-dominated fields, such as care and welfare. 

• Before occupational segregation comes educational segregation. Women are under-represented (by 15 % to 20 %) among the educational fields linked to higher-paying occupations (e.g. engineering or ICT) and over-represented (60 % to 80 %) in fields linked to below-median graduate earnings (e.g. personal services or welfare). 

• That women account for a growing share of employment in higher-skilled occupations and higher-paid jobs is a signal of progress towards gender equality. The caveat, however, is that gender pay gaps are sharpest in high-skilled and well-paid jobs. By forcing employers to be explicit about gender differences in professional pay in particular, and to take appropriate action, the EU Pay Transparency Directive has a role to play in mitigating these gaps. So too does the Gender Balance on Corporate Boards Directive, the targets of which are to be met during 2026. 

• Occupational segregation – one of the main drivers of pay gaps – is the flipside of educational segregation. Many initiatives seek to address the under-representation of women in higher-earning occupations related to science, technology, engineering and mathematics. The aggregate data – on enrolment in the relevant educational courses or on occupation in employment – suggest that there is as yet limited evidence of success. Female shares are shifting only gradually at best. Policymakers should address the origins of these disparities in early education rather than waiting to remedy them in later phases. 

• Employment policy has been successful in increasing overall employment rates towards headline targets (78 % employment rate for those aged 20 to 64 by 2030), largely as a result of the increasing numbers of women in work. In a context of relatively low unemployment, policy could target the sizeable pool of jobless female graduates to address skill shortages in areas such as health and ICT.