Category Archives: wonkfest: article review

Will you earn less than he does?

This review discusses the article “A Grand Gender Convergence: Its Last Chapter,” by Claudia Goldin. American Economic Review 104/4 (2014): 1091-1119. Available here.

In this article, Claudia Goldin, a Harvard professor of Economics and expert on the gender pay gap, describes women’s earnings in the 20 and 21st centuries. Overall, women’s education, earnings, and work experience have gradually moved in the direction of men’s, with college-enrolled women even outnumbering men, and more women in law school and medical school than men overallwoman with sign. However, Goldin sees a “plateau in [workforce] participation… in most age groups, even for college graduate women, since around the 1990s” (p. 1092). This gap in participation, she argues in the article, is as important, or more important, than the earnings ratios (like 77 cents on the dollar, women’s earnings to men’s earnings) that we have all heard about.

Her argument works this way. Nobody really accepts the belief that women are less productive than men in the same job anymore. In other words, men and women who do the same jobs are both similarly effective and similarly productive. So why are there still difference in the wages paid to men and to women when they have similar educations and work in the same fields? Goldin gives three possible reasons advanced by other scholars:

  • Actual discrimination against women; employers deliberately pay women less. (This was certainly true 50 years ago; Goldin is skeptical that this problem is still widespread.)
  • Less assertive behavior from women, who do not like to argue for raises and other kinds of recognition. (As she points out, there is evidence that women are less likely to enter confrontations over wages.)
  • Promotion standards that assume that women are more likely to leave a job for family reasons and/or penalize those who have been out of the work force. (Have you ever heard that women should not wear engagement rings to job interviews?)

Although Goldin believes these arguments may have some traction, she has examined extensive data about the time women spend in the labor force relative to their earnings, and she finds that the explanations above don’t answer the question to her satisfaction. She observes that women’s earnings relative to men move further apart as they grow older – but only for those women who have families. Women who do not have children or are unmarried maintain almost identical salaries to men.

Here’s how she explains it: “As women have increased their productivity enhancing characteristics and as they ‘look’ more like men, the human capital part of the wage difference has been squeezed out” (p. 1093). If you work the same as the men you work with, you’ll probably get paid the same.

However, when Goldin used statistics of American workers born between the 1930s and the 1990s, controlled for age and education, she observed that a large contributing factor in unequal pay is what she calls “amenities,” meaning the perks that people in the work force are able to get from their employers because of their expertise. Since many white-collar jobs reward the number of hours that people work – think doctors doing night shifts, lawyers writing briefs, science professors who never leave the lab – she shows that women who ask for “temporal flexibility” in order to care for their families earn less. This is what Anne-Marie Slaughter, the writer of a book called  Unfinished Business and a researcher on public policy, calls the “care penalty.” Caring for others takes your body (and your mind?) away from work, and that affects both the way your boss may judge you and also the level of your pay. Caring for others is a traditionally female job, so the people who choose to take temporal flexibility as their job amenity will largely be female, and the cost of that flexibility will mean that their wages will be lower.

Is there a way to eliminate the “care penalty”? What Goldin calls the “last chapter” of wage inequality has a solution, but it’s not an easy one: “The last chapter must be concerned with how worker time is allocated, used and remunerated and it must involve a reduction in the dependence of remuneration on particular segments of time” (p. 1117).  In plain English: the penalty for time flexibility has to go away. One way of doing this, she suggests, is that white-collar workers must be more able to substitute for one another: for example, any pharmacist at the drug store can help you if you need help, but if you are a scientist working on a complicated experiment, and you’re not there, the experiment falls apart.  What Goldin calls “substitutability” is one way of supporting people who need time flexibility but still maintain considerable field expertise. She notes that pharmacists, veterinarians, doctors and other white-collar professions have reduced the pay gap through the use of substitutability.

On the other hand, “Not all positions can be changed. There will always be 24/7 positions with on-call, all-the-time employees and managers, including many CEOs, trial lawyers, merger-and-acquisition bankers, surgeons, and the U.S. Secretary of State” (1118). Goldin is convinced, however, that greater time flexibility (for those professions that can accommodate it) is one way of solving the gender pay gap.

Want to read more?

Interview with Claudia Goldin at Freakonomics.com

Goldin’s entry on the Gender Gap in the Concise Encyclopedia of Economics

“Wonkfest” posts review secondary literature that you probably should read but don’t have time for.