Today, the winner of the Economics “Nobel Prize” equivalent was announced.
Claudia Goldin won for her work on women in the labour market.
Here are five takeaways from her research:
1. The U-shaped relationship
As a country’s wages increase, production moves from the family farm to a wider market (such as industry).
For married women, this often meant they worked at home instead in unpaid work (childcare). This reduced their labour force participation.
But as wages increased further, women receive more and better education.
This raises the market value of women’s work time. Eventually this increases labour force participation for these same married women.
Thus, there is a U-shaped relationship. As a country develops, married women see at first falling, then rising, labour force participation.
2. Why change can take generations | Updating career expectations
From the 1920s through to the 1960s, there were rapid changes in the careers available to women.
Yet, there were still large gender gaps in schooling. Few women were attending graduate or professional schools.
Goldin makes an argument that this is because of misaligned expectations.
Women were not educationally prepared for the rapid changes in available jobs. Thus, women were more likely to end up in jobs without potential to advance or learn on the job.
So it took the next generation of women in the 1960s and 1970s to take these educational opportunities.
This generation correctly anticipated their future participation in the labour force. For them, this made education much more worthwhile as an investment.
3. The importance of the pill
Contraceptive pills contributed to, as Goldin calls it, a “quiet revolution” starting in the 1970s.
Women’s careers are often cut short by pregnancy and marriage.
But in part due to the pill, women married 2.5 years later on average.
As a result, it was now easier to enter fields with extended training requirements. This included vocational schools for medics and dentists as well as other professions and academia.
This closed the gap between men and women in labour force participation, pay and education in the 1970s and onwards.
4. Why inflexible work is the last chapter in the pay gap – 2010s and 2020s
In some industries, pay is linear with hours – double the hours means double the pay. This includes pharmacists.
In other industries, pay is nonlinear (convex) with hours – double the hours means more than double the pay. This includes lawyers and types of self-employed work.
Workers are paid to be available at any moment (“on call”) and client interactions / relationships are important. Work is less flexible.
As a result these industries are more punishing to those who demand flexibility in the workplace. Flexibility comes at a higher “price”.
The “last chapter” in closing gender gaps is to make flexibility “cheaper”.
For example, having substitute workers who can maintain links with clients, which may mean greater teamwork.
While this cannot occur in all positions, a rise in workplace flexibility can benefit men too, Goldin argues.
5. Historical research and the assembly of datasets
The Nobel Prize Committee describe Goldin as a “detective”.
She found data from obscure sources to generate a long economic history of gender gaps in pay, participation and education.
Often if a dataset does not exist, the easy answer is to avoid researching that area.
But in fact, Goldin shows there are large potential gains from digging out the data yourself. You can use these data to explain trends and form conclusions.
Final thoughts
Goldin was the first tenured professor at the Harvard Economics department, which only happened in 1990.
Goldin also mentions that economics is a male-dominated profession. Perhaps with more female economists, we would have an even greater number and variety of ideas.
Her work also shows both the wide variety of topics economists study.
As a result, I strongly recommend sharing her work with students.
Here I haven’t done justice to her work. But you can read much more here.
Questions for students
- Why might the gender pay gap be a problem? Why might it not be a problem?
- Should the government intervene in the gender pay gap? If so, how?
- Labour market economists, including Goldin, like to discuss “income effects” and “substitution effects” heavily. How do these effects apply to an increase in wages? How might that explain the U-shaped link between development and the labour force participation gap?
- Does Goldin’s research give you any ideas for other areas of labour economics or economics more generally?
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More Sources
Here are some of Goldin’s papers on which the content above is based: here, here and here.