The BBVA Foundation Frontiers of Knowledge Award in the Economics, Finance and Management category has gone in this eleventh edition to the American economic historian Claudia Goldin “for her groundbreaking contributions to the historical analysis of the role of women in the economy, and for her analysis of the reasons behind gender inequality.”
26 March, 2019
Goldin “is credited with founding the field of empirical analysis of the gender gap,” remarked the committee on announcing its decision, starting with her seminal 1990 publication Understanding the Gender Gap: An Economic History of American Women. This hugely influential book examined the roots of wage inequality between men and women, questioning the conventional explanations.
In this innovative and incisive work, Goldin combines long historical time series on the labor-market wage gap with insights from economic theories on wage determination, employment and discrimination to trace out the economic history of American women. “Although it looks at one country, the United States, its results are applicable elsewhere,” remarked the new laureate after hearing of the award.
Goldin locates the origins of wage discrimination in the growing use of incentive mechanisms that accompanied the expansion of clerical work at the beginning of the 20th century, which contrasted with the predominantly piecework rates paid to women in the manufacturing industries of the time. She argues that the subsequent establishment of personnel departments and policies created the institutional conditions that perpetuated this discrimination.
Her research examines how women’s aspirations changed in the course of the 20th century: after an initial period in which the choice was basically between the home and subsistence labor, from the 1920s women began to place work before the family. Around the mid-1940s, the priority switched to family then job – these were the baby boom years with a higher fraction of women marrying at a younger age. Next came the cohort of women coming of age from the mid-1960s to the end of the 1970s, who put career before family, postponing in consequence marriage and kids. And from there to the women born around 1980, who are saying in essence that they want to have both.
In Understanding the Gender Gap, Goldin also observes that although gender differences persist, they have lessened over time. “The key factors behind this – she says – have to do with what is going on around individuals rather than individuals themselves. Things like economic and technological change and the rise in real incomes. These have come together with an increase in education and it is that, more than any other factor, that has empowered individual women to seek their own identities and careers.”
Almost thirty years later, the book remains a key source of material for students and scholars in this area of research, and has shaped much of the current work on women and the labor markets.
Aside from her interest in female employment, Goldin has delved into a wide range of issues, including immigration, income inequality, education, and technological change. Most of her research interprets the present through the lens of the past, exploring the roots of many of today’s concerns. She is currently rounding off an ambitious project on the family and professional transitions of college graduates of both sexes from the end of the 19th century to the present day.
Closing the gap
“We carry with us cultural and societal differences that we inherit from the past,” explains Goldin, referring to the multiple causes of the gender pay gap. Foremost among them, she contends, is a model of work organization whereby firms set more value on employees who work longer hours. “If a couple has kids that need care, one person in the couple is going to be more responsible for controlling things at home, while the other concentrates on work. So, by and large, women are disproportionately on call at home, and men are disproportionately on call at the office.”
Motherhood and childcare are therefore another root cause. “In many studies, we don’t see large income differences between men and women when women don’t have children or are not taking on the responsibilities of the home.”
In effect, the gender wage gap changes with age. It starts small at the time of leaving education, then gets bigger and bigger as women start marrying and having children. In the United States, new female graduates earn 92 cents for every dollar a man earns. By the time they are 40, this is down to just 73 cents.
Reflecting on this, Goldin believes that “the change has to come from men and not women.” As she sees it, if fathers make it clear to their employers that they want to be paid more for their availability, they will be impressing on them that they value their families a lot. “And if firms realize they need to do more to remunerate this availability, they will logically respond.”
The Harvard professor offers an example from the U.S. healthcare sector, where doctors have been campaigning for more flexible hours. This led to the formation of “groups of individuals with equivalent skills that can take over from each other when they have family needs to attend to. In this way the firm or organization can avoid having to pay a lot more to have the individual tend to their children.”
Goldin – the first woman to receive tenure in economics at the University of Pennsylvania and later at Harvard – advocates for a cultural shift both at work and at home: “Women are expected to take maternity leave, but men aren’t expected to take the equivalent family leave. This attitude has to change so a man taking paternity leave is not considered a bad worker.”
Again, the solution she proposes is to have groups of workers that can, as she describes it, lean on each other. If the norm is that every individual within the group can take his or her leave and they will cover for each other, then the business should feel little impact.
Looking to the future, Professor Goldin insists that although historically much progress has been made in women’s workforce participation, “many of the issues we still face have to do with what goes on within our own homes, so are harder to get a grip on. The most important thing is to get men to be on call at home. They should be the first to tell their bosses I’m not going to work overtime this Sunday and miss my daughter’s soccer game.”
The committee also singled out her influential article “Orchestrating Impartiality: The Impact of Blind Auditions on the Sex Composition of Orchestras,” which proved the existence of sex-biased hiring by the simple expedient of concealing candidates behind a screen.
Another of her contributions flagged in the citation is “The Power of the Pill: Oral Contraceptives and Women’s Career and Marriage Decisions,” showing that with the widespread availability of the birth control pill, more women chose to pursue higher education, prioritize their careers and put off marriage.
Finally, the committee cites her book The Race between Education and Technology as contributing to “analysis of the recent trends of growing wage and income inequality.”