Gender Pay Gap Causes Not Simple to Solve

This year, Claudia Goldin of Harvard University has been awarded the Nobel Prize in Economic Sciences for her extensive research on gender differences in the labour market. Goldin’s research covers a wide range of topics, including factors influencing female labour-force participation, the origins of the gender pay gap, and biases against women in hiring.

Utilising over 200 years of data, Goldin depicts (see HERE) a “U-shaped curve” of female labour force participation over time, whereby female employment levels dropped in the early 1900s compared to the 1800s, only to rise through the latter half of the century. This reflects structural changes in the economy and evolving societal expectations on women’s responsibilities for family.

The workforce participation of women has greatly increased over recent decades. Yet, higher participation does not imply a close of the gender pay gap.

Conventionally, most research depicts education and occupational choice as the cause for earnings differences. However, Goldin’s research uncovered that the pay gap largely arises from gender, especially following the birth of the first child. The parenthood effect helps explain pay gaps in many developed countries, places where educational attainment is not the main driver.

One of Goldin’s previous works (see HERE) suggests that the gender pay gap widens with age, especially for those with family responsibilities. Together with co-authors Sari Pekkala Kerr, Claudia Olivetti and Erling Barth, the paper explores this widening gap in the move from early to mid-career. They propose this can be partially explained by men’s disproportionate movement into higher paying industries and positions, and higher propensity to advance within firms.

In her 2014 paper (see HERE), Goldin suggests that a solution for gender convergence must involve reducing remuneration that disproportionally rewards individuals for longer and continuous hours. Her model shows that industries or occupations that create time demands and limit worker interchangeability are linked to larger gender pay gaps.

The restructuring of work and remuneration to enhance flexibility has attracted great interest in recent years. Almost a decade after the “solution”, Goldin’s contribution to gender pay gap research has been recognised and awarded in the academic world. Her detailed, painstaking and nuanced work suggests, if anything, that legislating for companies to close the gap may not be sufficient to address systemic causes.

© Guerdon Associates 2024
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