M. Kabir Hassan, PhD and Mashuk Rahman
The 2023 Nobel Memorial Prize in Economics recipient is Claudia Goldin. The renowned economist becomes the third female to win this award and the first to win it solo. She currently works among the faculty at Harvard and has been there since 1990. After completing her doctorate at the University of Chicago in Industrial Organization and Labor Economics, she worked at the University of Wisconsin at Madison, Princeton University, and the University of Pennsylvania. She has had a variety of lead appointments at several institutions, some of which include the American Economic Association, The Brookings Institution, and the National Bureau of Economic Research. Currently, and in tandem with her novel research, she is the co-director of the Gender in the Economy Group at NBER. The Royal Swedish Academy of Sciences awarded Goldin for her exemplary research and long commitment to advance “our understanding of women’s labour markets” (nobelprize.org, 2023).
Goldin targeted the gender gap puzzle. Her motivation targeted from the statistic that about 50% of all women worldwide are in paid employment, compared to 80% within the counterpart. Women earn less than men across fields and positions and within the same occupation. There is a notable market inefficiency due to women’s lower opportunities which continue to endure. Goldin’s novel finding showed that the female labor participation is curved in a U-shape:
Married women participated less between the transition from an agrarian to an industrial society; and they participated more with the growing service sector (nobelprize.org, 2023).
Previous research indicated a positive association between economic growth and women’s participation. Goldin collected and examined over 200 years of economic data to find the consistent severe underrepresentation of women in the global labor market. She found existing historic public records from the turn of the nineteenth century to list a women’s occupation as “wife”, disregarding the early actions of women to work alongside their husbands to generate income (i.e. agriculture). Goldin corrected the data to represent the high employment of women in the early nineteenth century – three times greater than the original record – where we see women working in production within the cottage and textile industries. Over time, the population of older women began dropping out of participation, indicating the decline over the early 1900s.
Interestingly, the earnings between working men and women stayed stagnant. Upsettingly, the wage gap remained relatively consistent in favor of the male workforce. Goldin finds this to be causal to the intertwined societal limitations of motherhood over time. Young women are impacted by the experiences of previous generations of mothers, who resumed work after their children grew up. This is evident among male and female earnings within the same occupation, especially after the first child’s birth.
Goldin found a significant difference in the employment rates of married and unmarried women during the early 1900s, as 20% worked for pay, with only 5% of married women doing so. During the latter portion of the twentieth century, female education levels increased even to surpass male education levels in most high-income countries. Access to the contraceptive pill disrupted the existing labor environment, allowing females to further career aspirations across several industries. Technological advancements expanded the service sector and opened up the need to employ women in the workforce.
Social and institutional obstacles limited the influence of these factors, and the obstacles that women face due to marriage and childbirth stayed put. Notable legislation during the 1930s, including “Marriage bars,” hindered married women from continuing employment in several industries. Goldin also found that the ideology of limited female career expectations hindered their employment, especially evident in the advancement of higher management roles at firms. In the 1950s, as mothers returned to the workforce, daughters had chosen their education paths, having been accustomed to their mothers’ role during their upbringing. During this time, women invested more in education, while they underestimated how much they would and could work outside the home.
Furthermore, with rising competition for managerial positions, women still faced a significant challenge to adhere to education, career, and personal expectations. Women face unfair challenges when juggling decisions to pursue higher education, work promotions, and family planning compared to men. These challenges are further complicated with a woman’s age. Goldin found that men benefitted from the attractivity of having long and uninterrupted work experience. In hindsight, the contraceptive pill alleviated the barrier women faced in their twenties to early thirties by allowing them to delay marriage and childbirth.
The earnings gap between men and women in high-income countries is between 10% and 20%. While contemporary legislation is poised to bring equal pay, and women are often more educated than men, the effects of parenthood must explain the gap. With each child, the gap increases from a small gap between initial earnings. Again, opportunities often match with long and uninterrupted work experiences. Within contemporary labor markets, employers expect availability and flexibility from workers. In turn, women progress slower than men in the workplace in the wake of the added responsibility of childcare.
Goldin remarkably compiles vast data to explain the history behind a significant issue within our labor markets. She sheds light on the compounding of obstacles women face due to lasting ideologies of traditional gender roles in the contemporary market. She acknowledges the generational perseverance of the last several generations to advance and empower the next generation of women. The fact remains that withstanding the recent improvements in equity legislature, education, and career progression, women’s choices are, still to this day, limited by her responsibility for the home. This constitutes the current issues with the gap in wages and workplace representation. Goldin’s findings highlight the necessary structural changes to reform the labor market.
Policymakers must develop a legislature to remove the institutional barrier. The solution will require investments in education at all levels. Research should pursue experiments that restructure the ideologies of familial responsibilities between partners. Work culture should uniformly prioritize employee work flexibility. Firms should have ample maternity and paternity leave, with a detailed roadmap to transitioning the return to work.
In conclusion, Claudia Goldin has dedicated her career to uncovering the hidden details within the change in female labor participation. She finds that significant impacts of structural changes are found over longer horizons. Due to her extensive research on how women have grown from within themselves, she dedicates her career to empowering women globally and pushing society forward.
(M. Kabir Hassan is a Professor of Finance at the University of New Orleans, USA and Mashuk Rahman is a Ph.D. Student at the University of New Orleans, USA).