8888677771 | The labour market is tougher on women. This is what the Economics Nobel for 2023 acknowledges

My first reaction to the announcement of the 2023 Economics Nobel Prize was the Hindustani phrase “der aaye, durust aaye” (better late than never). By duly recognising Harvard economist Claudia Goldin’s insightful work, the Nobel Committee will hopefully compel the rest of the Economics fraternity to admit that labour markets are not gender-neutral, working efficiently to choose the best person for the job. Women have disadvantageous outcomes in terms of occupation and wages, even when they are just as qualified as men. Over the years, thanks to Goldin’s work and that of several feminist economists, the sub-field within economics that focuses on male-female gaps and gender discrimination has grown exponentially, making it clear that labour markets work very differently for men and women. By choosing Claudia Goldin as the recipient of the highest award in Economics, the Nobel committee has provided the official stamp of legitimacy to this body of analysis.

Over more than three decades of exploration with mainly US data, Goldin has focused on the big picture questions of how women’s labour force participation (LFP) and gender wage gaps have evolved historically. She is well-known for suggesting the U-shaped relationship between economic development and women’s LFP based on cross-sectional data from over 100 countries. Countries at low levels of economic development have relatively higher levels of female LFP as women are engaged in agriculture, often as unpaid workers on family farms. As incomes rise, due to industrialisation and introduction of new technologies, women withdraw from paid work and retreat into the home. Their hours of work do not change but their labour force participation does. This is the so-called “income effect”. As countries develop and women’s education rises further, women move back into paid work.

In her 2021 book, Career and Family: Women’s Century Long Journey towards Equity, Goldin examines the gender wage gap among college-educated US women over a century. She shows that since the 2000s, especially, the wage gap between college-educated men and women has stagnated. While in earlier decades, men earned more because they were better educated, that is no longer the case. Women today are more likely to have a college degree than men.

What explains the wage gap then? One factor is occupational segregation — women work in stereotypically feminine jobs that are lower paying. Goldin argues that in the US, gender wage gaps at entry level are not stark. Going up the occupational ladder, she highlights the phenomenon of “greedy” jobs, which have massive wage premiums but, in return, require long work hours, networking, late-night meetings, travel. In a family of two working parents with kids, only one parent would be able to afford to work this way. The other would be on the “mommy track”, continuing in less demanding jobs which would allow taking care of the kids’ school, homework, sports, music lessons, and doctor visits. The mommy track parent doesn’t literally have to be the mother, but most often is. This creates a large pay gap between men and women, because the man is in the greedy job and the woman is on mommy track (in most cases).

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Two other components of Goldin’s work deserve special mention. One is her 2000 paper with Cecilia Rouse, “Orchestrating Impartiality: The impact of blind auditions on female musicians”, which shows that auditions for symphony orchestras done behind a screen, where the jury cannot see the candidate, result in greater hiring and advancement of women. The other paper, with Lawrence Katz, is called “The Power of the Pill: Oral Contraceptives and Women’s Career and Marriage Decisions”, which shows that the pill directly raised the age at first marriage and enabled women to have greater control over their careers and timing the birth of children. This paper shows the importance of choice and agency in shaping women’s outcomes.

Festive offer

How well do Goldin’s results from US data apply to developing countries, such as India? Even within the US, do her results hold equally robustly for all categories of women? How do gender inequalities in the world of employment get mirrored in allocation of domestic work? These are deep questions, worthy of discussion. The hallmark of any insightful research is that it spurs a body of exploration that adds nuance and context to the original set of ideas. Goldin’s analysis of gender gaps has certainly performed that role. The best way to celebrate her contribution would be to make all economic analysis and policy-making gender sensitive, incorporating nuance that recognises heterogeneity and intersectionality.

The writer is Professor and Head, Department of Economics and Director, Centre for Economic Data and Analysis (CEDA), Ashoka University.

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