This chapter spells out the nature and causes of the gender pay gap. The idea of decomposing the pay gap is used to show its key substantial drivers. Using the BHPS, the authors show how the drivers of the gender pay gap changed since the1997. The analysis draws attention to part-time work and to women’s job downgrading when they return to employment after childbirth and looks briefly at the indirect factors contributing to the pay gap, such as the work career overall. Specific attention is placed on the large size of the gender residual and how it is best to think of this as the result of a structured system of institutions and norms in which gender plays a very important part.