Why Do Women Earn Less Than Men? Harvard Economist and Nobel Winner Claudia Goldin Explains

By Mr. Blanton

In early October, it came across the wire that Claudia Goldin, Harvard economic historian, won the Nobel Memorial Prize in Economic Sciences for her work in labor economics. As an economic historian myself, but knowing little about Goldin’s work, your intrepid friendly neighborhood econ teacher swung into action to learn about Goldin’s contributions to economic history.

Goldin’s work is wide-ranging, but a lot of it has focused on explaining the gender pay gap. The gender pay gap is a simple idea to articulate: on the whole, women earn less income than men. In a write-up following the announcement of Goldin’s prize, The New York Times cited a statistic based on Federal Reserve data that “women in the United States make a little over 80 cents for every dollar a man makes.”[1] That’s the pay gap. Often the argument is expanded to assert that women earn less than men for the same work. Female accountants or female teachers earn less than male accountants or teachers despite doing the same jobs. But why do such problems exist? One explanation is systemic sexism. Women earn less than men because employers discriminate against them, reflecting negative cultural attitudes toward women.[2] But one of Goldin’s key research papers, “A Grand Gender Convergence: Its Last Chapter,” suggests that contemporary pay gaps in the United States are more complicated and have less to do with employer sexism and more to do with intricate social dynamics. In my view, her argument is worth understanding.
 
The first observation she makes in the paper is to highlight the degree of wage convergence in the twentieth century United States. In other words, the wages of women and men have equalized significantly across the board between 1900 and 2000, especially since the 1970s. Historically, and without doubt, sexism dramatically depressed the participation of women in the labor force, undermining their ability to earn an income. But the arc of history in this case has bent toward justice as more and more women have entered the labor force and graduated with college degrees, helping to equalize wages. Three cheers for that.[3]
 
Yet pay gaps continue to exist despite significant wage convergence. Why? Goldin does a lot of mathy econ stuff to argue that existing pay gaps are biggest in vocations with inflexible work schedules. These kinds of jobs require long hours, demand constant access and being on call, and come with limited time off. Think lawyers, doctors, CEOs. But if a job has a more flexible work schedule — more regular hours, ability to disconnect, more time off — wage gaps either do not exist or are negligible.[4]
 
Again, why? Goldin’s answer is a compelling one. When women initially enter the labor force out of college to start jobs with inflexible work schedules such as law, they earn as much as their male counterparts. But over time a pay gap emerges because women are more likely than men to either exit the labor force or accept a reduced role to have and sustain families. Married women in particular may exit the labor force if their husband earns a high enough income. And, thus, pronounced pay gaps emerge in high-paying but inflexible jobs because some women choose either flexible work schedules or to leave the labor force rather than keep the high-paying job.[5]
 
Goldin’s analysis clearly undermines the employer discrimination hypothesis. According to her data, women earn as much as men out of college. If employer discrimination were the primary problem, we should see pay gaps throughout a woman’s career. Goldin’s evidence indicates that pay gaps emerge as the nature of high-paying but inflexible jobs collide with other goals and desires, especially having children. It is true that women disproportionately bear that social burden, and thinking about why is a discussion worth having. But, the argument that systemic employer sexism is the key variable to explain contemporary pay gaps is unlikely. To be clear, this does not mean that discrimination is irrelevant: it can and likely still happens; rather, Goldin’s point is that employer discrimination is not the main explanatory ingredient.
 
Goldin advises that if we want to eliminate gender pay gaps, we should strive to give all jobs greater scheduling flexibility. In her view, we need to address and mitigate the sense that women must choose between career advancement and having a family–what she calls “couple equity.”[6] Many seem to choose family over job when they cannot simultaneously get their kids to soccer practice and argue a case in court. Consequently, many seem to fall back into a gendered division of labor, leaving high-earning men to keep earning while many women step back to do less, which means they earn less. As long as individuals voluntarily and willingly accept such roles rather than having them forced upon them as in the past, it is arguably not an issue. But this also implies that some gender pay gaps are a consequence of choosing a trade-off — someone has to devote more of their time and attention to the family — and will be difficult to eliminate. Is that something we can live with? That I leave to you all to decide.
 
[1] Jeanna Smialek, “Claudia Goldin Wins Nobel in Economics for Studying Women in the Work Force,” The New York Times (October 9 2023).
[2] Molly Mastantuono, “How Sexism Sustains the Gender Pay Gap,”(August 25 2022).
[3] Claudia Goldin, “A Grand Gender Convergence: Its Last Chapter,” American Economic Review vol. 104, no. 4 (April 2014): 1091-1093.
[4] Ibid., 1110-1116.
[5] Ibid., 1116-1118.
[6] The New York Times, “Claudia Goldin Wins Nobel in Economics for Studying Women in the Work Force.”