On December 10, the Nobel Prizes were given out during a solemn ceremony at Stockholm’s Concert Hall. The Nobels are awarded in physics, chemistry, medicine, literature and peace, and they are considered the most prestigious prizes in their respective fields. Administered by the Nobel Foundation, according to the will of Swedish inventor and entrepreneur Alfred Nobel, they were first conferred in 1901. In 1969, Sweden’s central bank introduced a sixth prize in economic sciences. Technically, this is not a Nobel Prize because it was not part of Alfred Nobel’s original will. Nevertheless, it follows a similar process of selection and award, and it is commonly known as the Nobel Prize in Economics. This year, its recipient was American economist Claudia Goldin.

A detective of economics

Goldin was born in New York City in 1946. When she was young, she was not interested in economics. “I wanted to be a detective,” she confessed. In high school she liked biology and thought she could become a scientist and do her detective work under a microscope. She entered university to study microbiology, but she also attended a class in economics. That’s when she became fascinated by the subject. In the end, she abandoned microbiology and graduated in economics, but she never stopped considering herself a detective. She even wrote a piece titled The Economist as Detective. “The world is filled with mysteries,” she said, “and somehow I have this incredible optimistic view that I can figure them out.”

Investigating the female labour market

Goldin’s research, which won her the Nobel Prize, deals with the history of women’s participation in the American labour market. She analysed over 200 years of data, bringing together economics and economic history. Goldin showed that women worked more before the start of industrialization, mostly in agriculture. However, as industrialization progressed, it became more difficult for women to find work in new professions while raising a family. In the early 1900s, only 20% of women had paid work, and the percentage dropped to 5% among married women. This is because there were laws and corporate policies that limited access to jobs to women who were married, pregnant or with children.

The problem with expectations

Another key element Goldin identified was that of expectations. In the past, many women planned their future based on their mothers’ occupations. Because their mothers didn’t have careers or highly qualified jobs, they believed they were destined to a similar fate. Consequently, many didn’t go to university and settled for housework or menial jobs. Women’s expectations began to match those of men in the 1970s. From this point onwards, women were increasingly inclined to attend university in order to pursue more diverse and highly-qualified careers. Today, women’s education levels are higher than men’s in most high-income countries. Despite this, on average women earn less than men. Why?

The reasons for today’s pay gap

Goldin’s ‘detective work’ has helped explain the remaining gap. While income differences are minimal between men and women at the start of their careers, this changes with the arrival of their first child. Women tend to bear greater responsibility for childcare, and this becomes challenging in today’s work culture where employers expect employees to be always available. Employers also tend to favour workers who do not have to take maternity leave, and they pay more for those who work longer hours, including weekends. Thanks to Goldin’s groundbreaking research, we now know what needs to be done to resolve the gender pay gap. The private sector needs to move away from high-demand jobs for the few to flexible arrangements for all, and it should provide support for career breaks. Also, men need to be more involved in childcare responsibilities, and the state should support this with policies such as extended paternity leave and affordable childcare.

(Carlo Dellonte)
(Image: Shutterstock)