Revisiting the “Care Penalty” in the Portuguese Labor Market: Uncovering (Gender) Pay Differentials in Long‐Term Care

ABSTRACT Focusing on the distinctive characteristics of the highly gendered long‐term care (LTC) sector, in this study, we analyze wages and earnings within caring sectors through an integrated theoretical approach that includes theories of ageism, compensating wage differentials, and gender‐based devaluation. To explore potential pay differentials in LTC, we use a multilevel model based on linked employer–employee data covering virtually all employees in Portugal's manufacturing and service sectors. Within caring sectors, we find evidence of a remuneration premium for LTC, although its size is sensitive to model specification. Although this pattern is consistent with partial compensation for the emotional demands associated with caring for older adults, our results also indicate that institutional wage‐setting arrangements play an important role in shaping this premium. Overall, however, a care penalty is evident for caring sectors vis‐à‐vis other sectors in the economy—with occupational penalties extending to sectoral penalties. Notably, the gender pay gap is substantially smaller in LTC than in other sectors, a pattern that coincides with wage compression at the lower end of the distribution, whereas persisting disparities at the top remain consistent with gendered and other structural wage‐setting processes among higher earners. Revealing these remunerational disparities provides policy‐relevant insights to enhance conditions and address LTC workforce needs in aging societies.