How Nobel laureate Claudia Goldin unravelled the gender gap inequities in labour markets

How Nobel laureate Claudia Goldin unravelled the gender gap inequities in labour markets

 

"When I told my husband about winning the Nobel, he asked me what he could do. I told him to take the dog out and make some tea and that I had to prepare for a press conference," Claudia Goldin, who won the 2023 Nobel Economics Prize, said in a recording on the Nobel website. 

Harvard economic historian Goldin has always been committed to exposing the causes of deeply rooted wage and labour market inequality between men and women. 

Goldin, who in 1990 became the first woman to be tenured at Harvard's economics department, is only the third woman to win the Nobel economics prize and the first to win it by herself rather than sharing it.

The 'X' factor in global labour markets
For a long time, women were not recognised as a part of the global labour market. And when they finally did emerge out of the shadows, they were underpaid. While it is illegal across much of the world for employers to discriminate based on gender, women still face significant shortfalls in pay compared to men. In the US, women last year earned on average 82 per cent of what men earned, according to Pew Research Center. In Europe, women earned 13 per cent on average less per hour than men in 2021, according to European Commission data.

The wage gap between genders in India is among the widest in the world. According to the Global Gender Gap Report 2021, women, on average, were paid 21 per cent of the income of men.

Goldin has trawled the archives and collected over 200 years of data from the US, allowing her to demonstrate how and why gender differences in earnings and employment rates have changed over time. Goldin's 1990 book "Understanding the Gender Gap: An Economic History of American Women" was a hugely influential examination of the roots of wage inequality over 200 years of history.

She showed that female participation in the labour market did not have an upward trend over this entire period, but instead formed a U-shaped curve. The participation of married women decreased with the transition from an agrarian to an industrial society in the early 19th century and started to increase with the growth of the service sector in the early 20th century. Goldin explained this pattern as the result of structural change and evolving social norms regarding women’s responsibilities for the home and family.

During the 20th century, women’s education levels continuously increased, and in most high-income countries they are now substantially higher than for men.

Gender gap closing: A work-in-progress
Despite modernisation, economic growth and rising proportions of employed women in the twentieth century, for a long period of time, the earnings gap between women and men hardly closed.

Goldin has attributed the gap to factors ranging from outright discrimination to phenomena such as "greedy work", a term she coined for jobs that pay disproportionately more per hour when someone works longer or has less control over those hours, effectively penalising women who need to seek flexible labour.

According to Goldin, part of the explanation is that educational decisions, which impact a lifetime of career opportunities, are made at a relatively young age. If the expectations of young women are formed by the experiences of previous generations – for instance, their mothers, who did not go back to work until the children had grown up – then development will be slow.

Historically, much of the gender gap in earnings could be explained by differences in education and occupational choices. However, Goldin has shown that the bulk of this earnings difference is now between women in the same occupation and that it largely arises with the birth of the first child.

The role of contraceptive pills
Goldin also demonstrated that access to contraceptive pills played an important role in accelerating this revolutionary change by offering new opportunities for career planning.

She has also done studies on women's surnames after marriage as a social indicator and the reasons why women are now the majority of undergraduates.

She said at a press conference at Harvard that women had throughout history often been "hidden from view and uncompensated" for doing the same labour that men were paid for.

"They have over time left that arena of home or family farm or family business and moved to the broader arena of market production," she said. 

"They've become workers, they've begun earning a living for themselves and for their families. Their lives have greatly changed, but the labour market and the policies of governments are often slower to respond."

"There are still large differences between women and men in terms of what they do, how they're remunerated and so on," Goldin said.

"And the question is, why is this the case? And that's what the work is about."