In Summary
Women have made measurable progress over recent decades in narrowing gender pay gaps and increasing labor-force participation – but structural gaps persist. Across the OECD, the unadjusted gender pay gap – the percentage difference between the average earnings of all men and all women without accounting for differences in job type, hours worked, experience or seniority – has declined from 21% in the early 2000s to 13.7% in 2024, and female labor-force participation has risen steadily to 71%, compared with 81% of men. However, single metrics do not capture the full economic impact of these gender disparities as important structural differences remain: women continue to work fewer paid hours, experience more career interruptions and receive on average 23.7% lower pension income than men.
It’s about more than equal pay: What ultimately matters is total income over the lifecycle. Lower earnings during working years reduce savings capacity, investment returns and pension entitlements. To measure this cumulative effect, we develop an integrated lifecycle model that combines labor income, capital income and pensions into a unified lifetime income measure, tracing women and men born in 1975, 2000 and 2025 across major OECD countries. Our results show that lifetime income gaps across the 14 analyzed countries declined markedly across cohorts: from roughly 33% for those born in 1975 to 16% for the 2000 cohort. This lifetime income gender gap is driven primarily by labor income (79%), followed by pensions (16%) and capital income (5%). Assuming a continuation of current structural trends, progress looks set to stall, with the lifetime income gap still at 16% for those born in 2025.
Country level results show sharply diverging trajectories: Sweden is projected to reach near parity (-2%), followed by the US and Spain (around 7%), while France, Czech Republic and Belgium approach low double-digit levels. By contrast, Italy, Germany and Switzerland continue to display sizeable gaps above 20% over the lifecycle of women and men born in 2025, indicating that the need for continued reform efforts to create equal conditions for men and women to foster the convergence of lifetime incomes.
Under current structural trends, progress slows – and the key driver is hours worked, not hourly wages. Moving the focus from the generational view to annual labor income dynamics clearly shows this diverging dynamic: A leading group – Sweden, the US, Spain, France, Czech Republic, Belgium, Poland and the Netherlands – is projected to see annual labor income gaps fall below 10% by the end of the century. In lagging countries – Germany, Italy, the UK, Denmark, Austria, and Switzerland – sizeable gaps persist as structural differences in part-time employment outweigh gains in participation and hourly pay. The future of gender income convergence will thus be determined less by wage equality per hour and more by the distribution of working hours across the lifecycle.
Closing gender income gaps faster requires structural change. To close the labor income gap, public policy must take the lead. Expanding affordable childcare, reducing disincentives for second earners and supporting continuous full-time employment would address disparities at their source – and represent sound fiscal policies that can pay for themselves over time. At the same time, women need to close emerging gender gaps in AI adoption - currently at 16%2 across the EU - to ensure full participation in future productivity gains and technological transformation. With regard to the pension gender gap, public pension design can help cushion the cumulative effects of career interruptions and lower lifetime earnings. However, in times of increasingly strained public finances, private pension provision will become more important. Women should therefore focus on strengthening financial literacy, which can increase annual investment returns by up to 1.5pps3, while also starting to save and invest as early as possible to fully benefit from the power of compounding.