An overview of 2023 Economics Nobel Prize winner Claudia Goldin’s research.
Name the first 3 famous female economists that come to your mind. Most people would be able to come up with even more examples of male economists, but why is it so hard to think of women economists? The social stigma that defines careers such as economics or engineering as male dominant professions can influence people’s perception of such careers, thus, influencing education decisions and later career opportunities, contributing to widen the differences in labor participation and earnings between genders.
Even after the increase in women participation in the labor market over the last couple of centuries, gender discrimination in the workforce is still a concern of the present. In fact, the 2023 Economics Nobel prize was awarded to Claudia Goldin (only the third woman to ever receive the Economics Nobel) who conducted groundbreaking research on the underlying causes behind change in the labor participation of women (Smialek, 2023). Her studies give insight to what is behind the remaining gender gaps in earnings, highlighting the relevance of social stigmas and women’s expectations for their future careers as barriers for female entry in the labor market (NobelPrize.org, 2023).
In the early twentieth century, most women were expected to work for some years before marrying and later quit their jobs. Since they were not expecting to keep working after a certain time, they also did not have the need to acquire further professional knowledge, that is, their short term career expectation impacted their educational choices (Goldin, 2006). However, by the end of the twentieth century, due to societal changes, women often returned to the workforce after their children had grown. Their job opportunities then were determined by the educational choices they had made around twenty five years before, when they were not expected to have long careers (NobelPrize.org, 2023). Consequently, social norms actually curtailed the potential for women’s earnings in that period.
But expectations also changed through time. For instance, an invention that drastically changed women’s labor market expectations in the 1960s was the pill, an easy and practical contraceptive method. Goldin found that the introduction of the pill affected women’s professional choices and even their preferences as more women decided to delay marriage and childbirth. By being able to better plan their future, women now had incentives to invest time and effort into their education and careers (Goldin, 2006). But, the influence of the pill by itself was not sufficient to completely bridge the gender gap between earnings. Even though the difference of payment became smaller since the 1970s, it was still very much present (NobelPrize.org, 2023).
Indeed, by analyzing data covering over 200 years of the US labor market, Goldin came to the conclusion that the gender gap in payment lessened with historical societal changes. However, even with economic growth, the increase in education, and in women working for pay, the earning gap remained basically the same between 1930 and 1980 (Goldin, 2014). Goldin explained this by showing that pay discrimination increased with the abandonment of piecework contracts, which were based on productivity, in favor of the modern pay system of monthly wages. This allowed employers to discriminate between genders, giving higher wages to men than to women. Moreover, the fact that employers tended to give benefits to employees with long, uninterrupted careers, also increased the pay discrimination against women, as employers generally expected higher job exit from women due to parenting and other family related responsibilities (NobelPrize.org, 2023).
Thus, Goldin identified parenthood as a key explanation for the persistent earnings gap between women and men. Goldin studied the changes of income between genders over time and demonstrated that differences between wages were initially small, but from the moment the first child was born, earnings for women would fall and would not grow at the same rate as for men, even considering the same levels of education and the same profession (Goldin, 2014). Since women are socially expected to fulfill the role of motherhood and take greater responsibilities in the care of their children, their career progression gets impacted. Increasing earnings becomes more complicated as women are typically the ones who choose to reduce their working hours or get more flexible jobs (Goldin, 2014). This is also a rational decision in the sense that as women were usually the ones earning less, cutting hours of work from the mother would be the optimal choice for the family’s income as a whole. Therefore, even in high-income countries with equal pay legislation, the social norms regarding parenthood end up affecting women’s career choices and increasing the income gap between genders.
By correcting and analyzing historical data, Goldin has provided a deeper understanding of the sometimes unnoticeable factors that impact women’s career opportunities. The limitations imposed by marriage, family duties and other social norms are relevant explanatory factors for the gaps in earnings and, thus, should be taken into account during discussions on how to eliminate the gender differences in payment. Goldin also demonstrated that changes in the behavior of the labor market take time to occur, since the impacts of many career choices based on false expectations still resonate even after years have passed (Goldin, 2006). Therefore, it is only by addressing the gender biases present in current society that the barriers preventing us to reach income equality between women and men can be finally lifted.
Sources:
Goldin, C. (2006). The Quiet Revolution That Transformed Women’s Employment, Education, and Family. American Economic Review, [online] 96(2), pp.1–21. doi:https://doi.org/10.1257/000282806777212350.
Goldin, C. (2014). A Grand Gender Convergence: Its Last Chapter. American Economic Review, 104(4), pp.1091–1119. doi:https://doi.org/10.1257/aer.104.4.1091.
NobelPrize.org. (n.d.). The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 2023. [online] Available at: https://www.nobelprize.org/prizes/economic-sciences/2023/press-release/.
NobelPrize.org. (2023). Rylander,Sara History helps us understand gender differences in the … Available at: https://www.nobelprize.org/uploads/2023/10/popular-economicsciencesprize2023.pdf (Accessed: 16 October 2023).
Smialek, J. (2023). Claudia Goldin Wins Nobel in Economics for Studying Women in the Work Force. The New York Times. [online] 9 Oct. Available at: https://www.nytimes.com/2023/10/09/business/economy/claudia-goldin-nobel-prize-economics.html#:~:text=The%20Nobel%20Memorial%20Prize%20in [Accessed 16 Oct. 2023].
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