The Nobel Prize in Economics for 2023 was awarded Monday (October 9) to Claudia Goldin, a Harvard University professor, for “having advanced our understanding of women’s labour market outcomes”.
Goldin’s pathbreaking work has shed light on the participation of women in the labour market over the past 200 years, and why the pay gap between men and women refuses to close even as many women are likely to be better educated than men in high income countries.
While her research focused on the US, her findings are applicable to many other countries. Here are her key findings.
Older data gave more perspective
Before Goldin’s book was published in 1990, data mainly from the 20th century had been published, and researchers believed that as the economy grew, so did women’s labour force participation. Goldin reached back to older data to reveal that before industrialisation, more women were likely to have been involved in economic activity related to agriculture and various cottage industries. With greater industrialisation, work was concentrated in factories, and women found it difficult to leave their homes and travel to work.
This trend reversed in the early 20th century, with the growth of the services sector. Two other factors played a crucial role in women’s access to higher education and employment — marriage and the contraceptive pill.
The limitations of marriage
Goldin’s work found that by the beginning of the 20th century, while around 20 per cent of women were gainfully employed, the share of married women was only five per cent.
“Goldin noted that legislation known as “marriage bars” often prevented married women from continuing their employment as teachers or office workers. Despite an increasing demand for labour, married women were excluded from parts of the labour market. This type of legislation peaked
during the 1930s’ Great Depression and the years following it – but was not the only reason. Goldin also demonstrated that there was another important factor in the slow reduction of the gap between men’s and women’s rates of employment, namely women’s expectations for their future careers,” the Nobel Prize website says.
Women’s expectations were based on the experience of their mothers, and thus their educational and professional decisions were not taken with the expectation of having a long, uninterrupted, and fruitful career
By the end of the 1960s, as easy-to-use contraceptive pills became more popular, women could exercise greater control over childbirth and actually plan careers and motherhood. Women also ventured beyond the services sector, studying subjects like law, economics, and medicine.
Now, women were catching up in terms of education and fields of employment. However, one glaring gap still remained and continues to this day — the gender-based pay gap.
Pay gap and parenthood
Till the time men and women worked in factories, where the pay depended on the day’s countable output, the pay gap was not too high. It became wider when monthly pay contracts came into the picture. One factor significantly impacted how men were paid versus women — childbirth. As women had to shoulder more of the parenting responsibilities once a child was born, they were also punished for this at the work front in terms of a slower rise on the payscale.
“By studying how differences in income between men and women changed over time, Goldin and her co-authors, Marianne Bertrand and Lawrence Katz, demonstrated in an article from 2010 that initial earnings differences are small. However, as soon as the first child arrives, the trend changes; earnings immediately fall and do not increase at the same rate for women who have a child as they do for men, even if they have the same education and profession,” the Nobel Prize website says.
About the Economics Nobel
A Nobel Prize in Economics was not part of Alfred Nobel’s 1895 will that established the other prizes. The prize is based on a donation received by the Nobel Foundation in 1968 from Sveriges Riksbank (Sweden’s central bank), on the bank’s 300th anniversary. It is formally called the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel.
Goldin is only the third woman to win this honour. In 2009, Elinor Ostrom got the award along with Oliver E Williamson, while in 2019, Esther Duflo shared it with Abhijit Banerjee and Michael Kremer.
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