01 Jan

Economy Nobel: Workplace Gender Gap

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Content

• Key Contribution
• How did female participation move between the agrarian and industrial era?
• Sources of Gap

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Details:

• Claudia Goldin, a professor at Harvard is only the third woman to ever be awarded the economic prize.
  • Earlier, Elinor Ostrom was awarded this in 2009 and Esther Duflo was awarded in 2019.

Key Contribution:

• She has studied 200 years of women participation in workplace in USA. Her work is the “first comprehensive account of women’s earning and labour market participation through the
  centuries”.
• As per her, the most important in the unequal paradigm “is that both lose”. Men are able to have the family and step up because women step back in terms of their jobs, but both are deprived. Men forgo family time and women often forego their career.
• The most significant of her observation was that female participation in the labor market
  didn’t exhibit an upward trend over the entire period, but rather a U-Shaped curve. In other
  words, economic growth ensuing in varied periods didn’t translate to reducing gender
  differences in the labour market.

How did female participation move between the agrarian and industrial era?

• The participation of married women decreased with the transition from an agrarian to an
  industrial society in the early nineteenth century.
  • The female participation in labor force was incorrectly assessed and stated in census
    and public data.
    • For e.g, a standard practice entailed categorizing women’s occupation as “wife” in records. This was wrong because this identification didn’t account for activities other than domestic labor such as working alongside husband in farms or family
      businesses, in cottage industry etc.
    • Thus, proportion of females in labor force was considerably greater at the end of the 1790s than was shown in the official stats.
  • Prior to advent of industrialization in the 19th century, women were more likely to participate in the labor force. This was because industrialization had made it harder for married women to work from home since they wouldn’t be able to balance the demand of their family

The beginning of the 20th century marked the upward trajectory for female participation in the labor force:

• Technological progress, the growth of the service sector and increased levels of education brought an increasing demand for more labor.
  • However, Social Stigma, legislation and other institutional barriers limited their influence.
  • Marriage Bars and Prevalent Expectations were two factors of importance there.
    • Marriage Bars refer to the practice of firing and not hiring women once married. This peaked during the 1930s Great Depression and the ensuing years – preventing women from continuing as teachers or officer workers.
    • Prevalent Expectations about their future careers. Women at varied points were subject to different circumstances when deciding on their life choices. Their decisions could be based on an assessment of expectations that might not come to fruition.
      • In the early 20th century for example, women were expected to exit the labor force upon marriage. When things turned marginally in the second half of the century, married women would return to the labor force once their children were older. However, this meant a reliance on educational choices that were made previously, as the author notes, at a time when they were not expected to have a career. The “underestimation” was overcome in the 1970s when young women invested more in education.
• Introduction of birth control pills played a crucial role in creating conditions for women to plan their careers better. Though this influenced educational and career choices positively, it didn’t translate into disappearance of the earning gap between men and women, though it became significantly smaller since the 1970s.
• Pay Discrimination (i.e., employees being paid differently because of factors such as color, religion, or sex, among others) increased significantly with the growth of the services sector in the 20th century.

Source of Gap:

• • Needing to combine paid work and family care needs.
  • Decisions (and expectations) related to pursuing education and raising children.
  • Technical Innovations
  • Laws and norms
  • Structural transformation in an economy.
• Nobel laureate Claudia Goldin’s hope for the future is that women have a career as well as a spouse who wants what they want.