The gender wage gap still exists in the US, but when ‘explained’ factors (years of experience, education level, hours worked) are considered, the wage gap for high-earning American men and women entering into similar jobs is almost non-existent. However, this wage gap increases as women progress in their careers, likely due to motherhood and its unequal distribution of non-paid household and child-rearing duties.
Source: Campaign
What does the data show?
As the global ‘Me Too’ movement highlights, there is still an unacceptable amount of sexism and bias in all sectors of society. However, as Claudia Goldin’s (2014) paper demonstrates, the empirical data surrounding gender wage discrimination are more nuanced.
Goldin’s work uses earnings data for highly educated (JDs, MBAs, etc.) men and women, dating back to the 1950s. As her data demonstrate, the gender wage gap has decreased since the 1950s, which she concludes is mostly a factor of women’s increases in human capital as they 1) attended university at higher rates and 2) chose and/or gained access to “more remunerative and career-oriented ones”.
In Goldin’s study, male and female workers with similar education and experience earn almost exactly equal remuneration at the start of their careers. But the gap widens 15 years after graduation because of motherhood’s dual impacts – recovery from childbirth and a higher likelihood of working fewer hours to stay at home with children. Unsurprisingly, women in Goldin’s (high achieving) sample worked 24% hours less on average.
Another key facet is that these wages are nonlinear, meaning the more hours worked, there is a ‘multiplier’ for higher salaries: working 35 hours might earn someone $50,000, but an employee working 70 hours would earn $150,000. Additionally, there is a wage premium for working irregular hours and client-facing roles, which are particularly difficult to achieve for mothers without equal household division of labor.
When Goldin breaks down the data, certain industries do better than others: Technology and Science occupations have the least premium for hour-inflexibility, which might explain the nearly non-existent wage gap there. Business and Law, conversely, are highly hour-inflexible and the hourly wages are highly nonlinear and inelastic.
Is the paper’s sample representative?
Goldin’s paper is incredibly valuable, and it is fantastic work on an important (and sensitive) topic. But its conclusions might go beyond what its parameters should allow because her data only focuses on upper-middle-class to rich Americans – who also tend to be disproportionately white. Not only is her data not broadly applicable globally, but it also is not even convincingly applicable in the United States, where nearly 40% of American women are people of color, and this share is only set to increase.
Goldin’s paper is a fantastic foundation, but further cross-section research involving not only multiple other nations but also broader segments of socio-economic populations would put its thematic conclusions on much more solid footing. In the meantime, Goldin’s work deserves attention and adds much toward solving an issue that is of great importance to all genders.
What policy could be used to correct the gender wage gap?
Goldin proves the gender gap is most correlated with motherhood. Therefore, while not a panacea, expanded paternal leave and norms around the equal division of household work and child-rearing would help ensure that if women work less, that it is their choice.
If this market failure is left unaddressed, it would have two salient negative effects: 50% of the workforce are not working at their full potential, and/or birth rates will decline and drag down GDP.
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