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Camilla Turner Education Editor 04 October 2021 7:45pm BST Women earn less than men in their twenties because they are choosing the wrong subjects to study at university, the Institute for
Fiscal Studies (IFS) has found. The gender pay gap emerges almost immediately after graduation, with male graduates earning on average five per cent more than female graduates at the age of
25, according to a new analysis. “Most of the initial gap can be explained by university subject choices, with women less likely to study subjects that lead to high-paying jobs,” researchers
at the IFS explained. “Women make up just a third of graduates in economics, the subject with the highest financial returns, and two thirds of graduates in creative arts, the subject with
the lowest returns.” The deadline for big companies to report their gender pay gaps is on Tuesday. Many companies are expected to cite childcare responsibilities as one of the major reasons
why women earn less than their male peers. The gap between men and women’s earnings does increase sharply after women have their first child and women are more likely to choose a job closer
to home or opt for a part-time role. But the IFS research shows that even before women have had their first child, they are already paid less than men with similar qualifications. ‘WOMEN
DISPROPORTIONATELY CHOOSE SUBJECTS THAT YIELD LOW FINANCIAL RETURNS’ Women are more likely to graduate from university with a first class or an upper second class degree than men. But at age
25 women earn on average five per cent less than men and by age 30 – before most graduates start having children – the gender pay gap increases to 25 per cent. “The financial return to
getting a degree – how much more a graduate earns compared to an otherwise similar non-graduate – varies enormously across subjects,” researchers said. They cited previous IFS studies which
show that taking a degree in economics at university boosts women’s pay by 75 per cent by age 30. This is more than ten times the return to studying creative arts (7.2 per cent). Women make
up nearly two-thirds of creative arts graduates and less than a third of economics graduates, meaning they are over-represented in the subjects with low financial returns. Equality Check -
Gender Pay Gap Xiaowei Xu, a senior research economist at IFS and an author of the research, said “Women disproportionately choose to study subjects that yield low financial returns. Of
course, money isn’t – and shouldn’t be – the only factor when it comes to choosing what to study. “But more needs to be done to inform young people about the financial consequences of degree
choices, and to overcome gender stereotypes, so that women are not locked out of high-paying careers by choices at a young age.”