A Woman's Work Is Never Done
What is the 2023 Nobel Prize in Economics about?
Orley Ashenfelter: how do you feel about the way you historically were treated in the profession as a woman?
Claudia Goldin: I spent six years at Princeton, and not once in the six years that I spent at Princeton was I asked to give a seminar.
Interview between Ashenfelter and Goldin on the former’s podcast (source and shout-out to the tweet by which I found about this)
Claudia Goldin just won the Nobel Prize in Economics, the third-ever woman to win and the first solo woman to get the top accolade in the field (take a look at this cute ass tweet). Goldin’s work, of which I am a huge fan of, has largely focused on women’s economic lives and economic issues.
As a fan of blogging about those… I have things to say (good things).
#Herstory
Once upon a time, economists believed that women didn’t work until the 1920s, when they started showing up in the workforce. The reason? A lot of surveys had women’s jobs as “wife”, which meant that they didn’t actually work (outside the house, at least). The job might be “beach”, but the actual responsibilities are more like surfer or lifeguard (couldn’t help it).
The truth is more complicated. For the longest time, everyone worked in agriculture related fields, and since that’s done in the household to a great extent, women had a high level of participation in the workforce. In fact, for the US, female labor force participation was only higher than in the present during the Revolutionary Era (aka the 1700s aka when everyone served in those powdered wigs), which was the most agrarian time in US history - even for urban women, who worked at even higher rates. Industrialization made it so home life and work life were completely separate, so labor force participation leveled off through the 19th century going into the 1900s, and though FLFP behaved weirdly during the Depression and spiked in WW2, it ticked back to its all-time low in the 1950s, but steadily increased from the 60s and 70s onwards.
Later on, as wages rose due to industrialization, it made sense to specialize: someone had to do domestic labor, while someone else had to do labor outside the house. The family is like a company, which produces goods and services at home for the family, or in market jobs to earn money, and spends that money outside the house; the relative wages of each partner and the cost of, say, appliances or takeout or childcare detemrine who does what and how much. Since society disadvantaged women relative to men (still does), women’s wages were lower, plus the whole cultural aspect, and therefore women stayed home.
The explanation for this is pretty straightforward: in poorer, more agrarian stages of development, everyone has to work. Meanwhile, at middle income tier, one earner is enough and women have to stay home to provide goods and services for the family. It made sense to specialize between domestic labor and labor outside the house. Since the relative wages of each partner and the cost of, say, appliances or takeout or childcare detemrine who does what and how much determine who does what work, and since society disadvantaged women relative to men (still does), women’s wages were lower, plus the whole cultural aspect, and therefore women stayed home. Finally, as incomes get higher and people get more educated, female labor opportunities get better, and the opportunity cost of staying at home cooking versus working becomes higher than the cost of buying appliances or hiring a nanny.
Goldin named this phenomenon the U-curve in a landmark paper on the topic, and it shows up pretty starkly at the international level, since you see the highest FLPF rates in extremely poor countries (such as Rwanda) or in extremely rich ones (such as Canada). This also means that the phenomenon commonly known as the Two Income Trap is pretty much bunk.
The role of marriage in this phenomenon is pretty relevant: until my parents’ lifetime, women left the workforce after marriage because it actually was illegal, until the 1950s, to hire married women in most industries, since it was expected that they become unpaid domestic laborers for the rest of their lives. Some professions, like teaching and nursing, were allowed to continue, however. However, for most of the “middle income” period there were many highly educated women who simply did not start families at all, and instead worked - Goldin calls this the “career or family” generation, followed by the “job then family” types (silent gen women), whose careers were short-lived and were the subjects of second-wave feminism. Their successors, the “family then career” moms (aka baby boomers), had a family and then rejoined once their children were grown. Right now, there’s a “career and family” generation, and has been for several decades. You can see this in the growing share of women who retain their own last names after marriage, mainly to streamline their own achievements outside the home.
The other aspect of this transformation of women’s economic participation is cultural. Firstly, women caught up to men in terms of education (and then surpassed them), leading to equity in human capital for each gender and raising the opportunity cost of being a stay at home mom. Secondly, there were a variety of social and cultural changes that shifted expectations of what women could and could not do (fun fact, Goldin published this NBER Working Paper today, same day she won the Nobel). This also allowed for multiple changes in legal, political, and medical aspects that allowed women more control over both family and work life, such as the widespread adoption of no-fault divorce, the legalization of the birth control pill, and even the legalization of abortion. Appliances becoming cheap and accessible, thus lowering the actual labor required at home, didn’t hurt. Male breadwinners disappeared, and two income households emerged. Thus came the latest stage in a story of 10,000 years.
Pure social changes, as in attitudes and stereotypes, also play a crucial role. Back in the 1950s and 60s, at the nadir of women’s labor force involvement, women indeed showed much less interest in a career than they do presently - surveys, for instance, show that the main reason why women attended college was to find a (successful) husband, rather than a career of their own. But, at the same time, the returns to getting a husband through an education were higher than the results of getting a job through an education - so we’re in a case of chicken and egg. Women later caught up to and surpassed men mainly through different patterns of behavior, so it’s all good now. Right?
Therapist, Mother, Maid
The gender pay gap: is it real? By this we mean is there is a difference between the earnings of men and women. Globally, there is, in most countries, but selection into employment (i.e. women with low earnings prospects not working), labor force participation differentials, and other factors suggest confusing trends - low pay gaps in poorer countries and high ones in richer ones. For the US specifically, the gender wage gap is estimated at around 17% of median earnings, it increases with both age and with income, and is larger for non-white women.
There’s two main sides of the gender pay gap: observables and unobservables. Observables are, as the name might imply, things that can be measured and accounted for, and unobservables are not. Groundbreaking. Unobservables include things like outright discrimination, preferences, ability, etc. Observables are such thing as work experience, occupation, union status, education, etc. This is what people mean when they say that “controlling for X, Y, Z, the gender wage gap shrinks or disappears” - they’re comparing people taking the specifics into account.
The gender wage gap shrank over the last ~50 years, a good development. Firstly, it happened because women matched and then surpassed men in education, especially at the college level. Experience also became less of an issue, since women used to have shorter labor force tenures for self-evident reasons. Occupation and industry shrank somewhat, but remain relevant - though they do not account for a lot, or even most, of the adjusted gap, which is two-thirds within each profession, not between them. Shorter hours and interruptions from the workforce have always been a big impediment for women’s careers, and this is especially true at the top of the income distribution.
Is this causd by discrimination? Kinda. Maybe. There’s definitely some in hiring, at least. In the movie Tár (you should probably know what to expect from me at this point), the orchestra needs a new cellist, so they conduct an audition behind a screen to choose one - which actually reflects a real world experiment done by Goldin, where orchestra auditions with screens (“blind auditions”) increased the number of women musicians chosen. And among psychologists, another experiment found that among equally qualified men and women, men were more likely to get hired. Empirically, discrimination is what we call an unobservable, and the fraction of the wage gap determined by variables that can’t be measured shrank from the 1960s to the 1990s, but didn’t really shrink any further. It could be due to discrimination, or due to other factors, but either way it seems to play a small (though sometimes real) role in wages and pay. In fact, the gender wage gap widened signficantly until the 1960s mainly due to discrimination, even as raw pay and workhours converged and diverged and reconverged. Gender became much more important in the 20th century than it had ever been, and later lost importance, mainly due to the reversal in college education disparities.
Is it about career choice? Only around a third, but yeah. This explanation is a bit curious since expected discrimination might be a big barrier for self selection - finance, for instance, is very male-centric, and STEM workplaces are constantly losing women workers, which is fairly common for male-dominated industries in general, in fact. This is so egregious, in fact, that gender non-conforming women tend to be better ranked by their coworkers, at least in the tech sector. Exactly why certain occupations tend to be segregated between men and women is a bit of an open question, and there is very much a cultural component to it - to some extent, beliefs and ideologies play a role.
In reality, and especially at the top of the income ladder, the gender wage gap is mostly caused by the fact that women work fewer hours and take more career breaks. Feminism DESTROYED with facts and LOGIC? Think again. This is largely due to motherhood: there is a lifelong earnings penalty for women after they have children (chart time!), to the point where motherhood and its implications account for most of the gender wage gap. This penalty is present in all industries and occupations, and even if it has decreased lately, it still presents a major challenge.
Most of the more obvious ways the gender wage gap manifested have vanished, but subtler, more insidious ones remain - culture, values, etc. One occupation with a tiny gender wage gap is pharmacist, which went from being characterized by self-owned small businesses to large chains with a lot of flexibility and an emphasis on part-time or flex-hour work. This resulted in more women chooisng to be pharmacists, since it allowed them to easily handle the demands of home life and the workplace. For instance, after giving birth, women have different career tracks in firms, meaning that their lifelong eranings get derailed by child-rearing. And in academia, women’s productivity decreases after having children compared to male academics. A recent paper has found that women and men are equally likely to get tenure controlling for all factors, including parental status, but ommitted from all the celebratory statements is the finding that only 27% of mothers get tenure, compared with 48% of fathers and 46% of childless women. Economics, after all, is pretty sexist.
Conclusion
Claudia Goldin’s influence on the literature surrounding women’s participation in the labor force cannot be overstated. Most of the core empirical facts and the theoretical frameworks for understanding them come from her work. There’s other valuable, interesting pieces of scholarship, but the core achievement is explaining the way women spend half their lives with a perspective centered on women. It’s US-centric, but holds up across the world too.
Don’t forget to like, share, subscribe, comment, and read previous posts (related to Goldin’s work) on marriage, the economics of the Barbie movie, the economics of Barbie (the doll), the gender pay gap, the two income trap, gender and race disparities, or culture in economics.
Also linking to the one song I keep making references to without any context.
PS I thought you might find this interesting: https://mises.org/wire/two-swedes-new-economics-nobel
Jeez that’s a powerful video / song at the end of a powerful piece. Will be sharing this widely and waiting for the news if your Nobel prize commendation (although I would submit that they are not worth what they used to be...).