monkeybusinessimages via iStockphoto
By: Madison Keezer
In the heart of Boston’s Financial District, one startling statistic echoes among the glass walls of corner offices: a 2019 U.S. Census Poll reports that a female financial manager earns, on average, $33,667 less than their male counterparts. This is not an isolated case, and at the Harvard University Department of Economics just across the Charles River, Claudia Goldin has helped to uncover the factors underlying this trend. For her research regarding the driving forces of gender gaps in labor force participation and wages, the Nobel Prize Committees have awarded Claudia Goldin the 2023 Nobel Prize in Economics. Goldin’s groundbreaking research explores how these factors have fluctuated over the span of 200 years.
How has labor force participation changed over time?
We know that more women participate in the labor force than they used to. However, the trend is not a strictly upward one; in fact, it’s u-shaped. Rather than consistently increasing, female participation in the labor force actually decreased for a period of time before increasing. Goldin discovered that this decrease occurred during the industrial revolution of the early 19th century. Participation didn’t start increasing again until the expansion of the service sector in the early 20th century. This is because, rather than manual labor, firms saw a need for more clerical work. Unlike manual labor, this type of work required a higher level of education, resulting in a subsequent increase in women’s education levels. In addition to the changing needs of firms, the invention of household technology like washing machines and refrigerators allowed more women to attend school and join the workforce. Goldin’s research showed that the introduction of the birth control pill in 1950 also played a significant role in the rise of women in the labor force, giving women more control over their lives and a better ability to plan their careers. This newfound control also contributed to more women pursuing higher education.
What were the barriers to increased female labor force participation?
Although these important milestones gave women the ability to pursue higher education and plan long-term careers, many women didn’t; AP News notes that progress was slowed by societal norms and expectations. Goldin’s paper published by the American Economic Association study explains that women who grew up in the 1950s didn’t expect long careers, instead expecting that they would work only until they had children, at which point their husband would become the primary provider. This led women to sometimes cut their education short. Once women’s expectations and societal norms as a whole began to change, more of them began pursuing higher education and participating in the labor force. The contraceptive pill also didn’t have an immediate effect. Claudia Goldin’s paper published by the National Bureau of Economic Research suggests that, although introduced in 1950, it didn’t produce a significant effect on the labor market until the late 1960s, when the laws restricting its availability to single women were removed. Goldin’s research maps the way that the introduction of birth control, the changing needs of firms, and advancements in household technology combined with changing norms and expectations to drive a steady increase in women labor force participation from the 1950s until the mid 1990s.
How has the gender wage gap changed over time?
Goldin’s research also centers around the gender wage gap. Similar to the improvements in labor force participation rates, the gender wage gap shrunk from 1890 to 1930 as the service sector expanded and women played an increasing role in clerical positions. The Royal Swedish Academy of Sciences highlights Goldin’s findings; although increased education, birth control, and changing expectations increased labor force participation beginning in the 1950s, the wage gap didn’t shrink as these factors changed. In fact, progress in reducing the wage gap stalled from 1930 to 1980. So, what changed in the ‘80s? Goldin attributes the change to a shift in attitudes. In the past, wage gaps could be blamed on differences in education and the jobs men and women chose to work. In short, it was an issue of mindset. Women saw themselves as secondary earners. Even though more of them were entering the workforce, they weren’t approaching their careers in the same way that men did. Expectations changed during what Goldin calls the “Quiet Revolution” of the 1970s, detailed in her paper published by the American Economics Association. Women began viewing their careers as part of their identity. They imagined themselves working, even after marriage. This was measured by the National Longitudinal Survey (NLS) of Young Women and the NLS of Youth, which gathered data as to how long young women expected to be in the labor force. By the 1980s, this turning point in mindset had caused the wage gap to start significantly shrinking for the first time in 50 years.
A woman’s pay will begin to diverge from that of a man with a similar career and education level a year or two after she has her first child.
Today, however, the gender wage gap has stalled yet again. This time, it cannot be blamed on differing jobs and educational attainment. Goldin’s paper, “When the Kids Grow Up: Women’s Employment and Earnings Across the Family Cycle,” reports that a difference in wages arises even between a man and woman in the same occupation. One of Goldin’s most significant findings is the driving factor behind this: parenthood. In her paper published by the National Bureau of Economic Research, Goldin found that a woman’s pay will begin to diverge from that of a man with a similar career and education level a year or two after she has her first child. Once it drops, it then doesn’t grow as fast as a man’s pay would. Even the careers of women with and without children diverge. AP News explains this trend, pointing out that “modern pay systems tend to reward employees with long, uninterrupted careers. Companies often demand that employees be available at all times and flexible about working late and on weekends.” In today’s society, Goldin finds that women take on far more of the childcare responsibilities than their partners, also writing that “disproportionate demands on women’s time relative to men’s may continue long after the children are grown, and aging parents frequently add to caring demands that often fall on women.” When women take on a disproportionate amount of childcare responsibilities, it’s difficult for them to meet an employer’s availability expectations as well as a man may be able to. In her paper, Goldin describes this resulting wage gap as the “motherhood penalty.”
What makes Goldin’s research so compelling?
“For several decades, [Goldin] has been at the forefront of uncovering the economics of women’s work and its evolution over the last two hundred years.”
William Collins, Professor of Economics and History, Vanderbilt University
William Collins, a Professor of Economics and History at Vanderbilt, had the opportunity to take courses with Goldin during his time as an undergraduate as well as benefit from her insight as he worked toward his Ph.D in economics and began his career as an economic historian. He explains how Goldin’s long-term research approach and the way she contextualizes her findings on a broader historical scale are what make her contributions stand out. Collins reflects, “For several decades, Claudia has been at the forefront of uncovering the economics of women’s work and its evolution over the last two hundred years. She has worked tirelessly to enrich, extend, and connect that story to other big themes in economic development.”
Collins clarifies that such a process not only requires taking on questions that are very narrow in focus, such as the impact of “the pill,” but also “developing and weaving in historical evidence on broader social, economic, and political factors, such as norms about marriage and married women’s work, trends in the labor market demand for clerical and professional workers, movements for equal rights and against discrimination, and young women’s changing expectations about their place in the labor force.”
He asserts that it is Goldin’s “commitment to everything she studies” and the “depth and breadth in her perspective on economic change” that make her a great economic historian.
What’s the significance of Goldin’s findings?
Goldin’s findings are important because they emphasize the importance of examining the past while looking toward the future; they demonstrate the connections between trends in the labor market and societal norms and expectations. By illuminating the barriers women faced in the past, we can identify and combat the barriers they face today. Specifically, we can use this information as we attempt to mend the persistent gender wage gap. Goldin proposes that couples should more evenly split childcare responsibility. She argues that the gender wage disparity is a reflection of gender disparities or imbalances in individual households and, in an interview with AP news, suggests that “ways in which we can even things out or create more couple equity also leads to more gender equality.” In order to spur movement in the stagnant gender wage gap, a societal mindset change must occur. The widespread expectation that women are the primary caregivers must change, just as expectations changed in the Quiet Revolution of the 1970s. In a press release for the Royal Swedish Academy of Sciences, Chair of the Committee for the Prize in Economic Sciences Jakob Svensson says that “[u]nderstanding women’s role in the labour [market] is important for society. Thanks to Claudia Goldin’s groundbreaking research, we now know much more about the underlying factors and which barriers may need to be addressed in the future.”
In terms of the broader impact of Goldin’s research, she’s a trailblazer in her field and one of the first to research the topic in depth. MarketWatch notes that, in the past, labor economists didn’t include women in analyses of the labor market. Misty Heggeness, professor of public affairs and economics at the University of Kansas, told MarketWatch that women’s choices were not typically included in labor market analyses because they were “too complicated.” By conducting research on women separately, Goldin demonstrates the pivotal role that women play in the labor market as well as provides a more comprehensive view of it as a whole. Heggeness explains how Goldin’s research can help to contextualize trends in the male labor force, writing that, “You see more stay-at-home dads today than you did three decades ago…We wouldn’t be able to really understand or tell that whole story if we didn’t also know what was kind of simultaneously going on with women.”
What does Goldin’s award mean for women?
Although her research is groundbreaking for women, Goldin’s award itself is a massive accomplishment for women everywhere. Goldin is the first solo woman to win the prize and the third overall woman to win it. This is a significant step forward for women in economics, which is greatly affected by the gender gap. In fact, according to a report published by the American Economics Association, only 22% of tenure-track faculty in economics are women. Goldin has already made strides for women in the field when she became the first woman to receive tenure in Harvard’s Economics Department. With her recent Nobel Prize, she continues to serve as a role model for all women in economics.
