The Gender Pay Gap: Understanding the Economic Disparities between Men and Women

Claudia Goldin, a renowned American economist and professor at Harvard University, recently won the Nobel Prize in Economic Sciences for her groundbreaking work that considerably improved our comprehension of women's labour market outcomes. Her research has clarified why women have been underrepresented in the workforce for decades and why they still make, on average, 13% less than men in high-income countries, despite having higher educational levels. This complicated problem has been clarified because of Goldin's meticulous examination of historical data in conjunction with economic theory ideas. Women and young scholars have been motivated by her work to address important economics-related issues.

Claudia Goldin's thorough examination of more than 200 years' worth of historical data marked the beginning of her remarkable path to the Nobel Prize. Her study was noteworthy because it showed that increased female labour force participation or wage parity did not result from economic growth alone. Contrary to traditional opinion, more women didn't just start working as economies grew. Prior research had not fully taken into account the complex complexities that underlie women's labour market engagement, as revealed by Goldin's work.

One of Goldin's research's most startling findings was the large participation disparity between men and women. The pursuit of gender parity in the workforce is encouraged by Goldin's Nobel Prize. By accurately identifying and understanding the issue, we will be better able to clear a path ahead and encourage a more equitable and inclusive workplace for all. Men make up around 80% of the workforce, but women make up just about 50% of the workforce. Additionally, there are regional differences in these participation gaps across the world, with the gender gap frequently exceeding 50% in places like South Asia, the Middle East, and North Africa. According to economists, this inequality indicates a "wasted opportunity" and an inefficient distribution of labour, which has a significant financial impact on society.

In addition to exposing the historical causes of the gender wage gap, Goldin's study showed that it is not just a result of individuals' choices in careers or educational paths. In actuality, the majority of the wage gap between men and women now in the same profession is mostly related to the birth of the first child. This realisation casts doubt on straightforward explanations and highlights the necessity of careful consideration while addressing the problem. Prior to Goldin's research, it was commonly believed that the rise in the percentage of women in the workforce over the 20th century was a direct result of economic expansion, with stronger growth translating into more women in employment. However, Goldin demonstrated that the proportion of married women working for pay, such as in agriculture or textile production, was at least as high in the late eighteenth century, during a period of much slower economic growth, as it is today. 

In her 1990 book Understanding the Gender Gap, she identified a U-shaped curve in women's labour participation over 200 years, which destroyed the idea of a straightforward connection to economic progress. In addition, Goldin showed that women were not as exploited as they may have been even if employment prospects for them increased in the 20th century, particularly in nations where children left their parents' homes. Goldin attributed this deficiency to unrealistic expectations. Young women tended to make educational decisions that did not represent an expectation of future employment opportunities, influenced by what they observed in their parents' generation. Women didn't begin to plan ahead for how much work they would be able to do and allocate their time and energy accordingly until the 1970s. 

Additionally, Goldin has demonstrated that pay disparities have not always had a straightforward correlation with economic expansion. The gender pay difference was narrower between 1820 and 1950, during the Industrial Revolution, and it barely altered between 1930 and 1980, when awards for long careers encouraged de facto wage discrimination. 

Simple explanations for how and why gender disparities in the employment market have altered have been disproved by Goldin's study. Her meticulous work in examining the problems through the prism of history might serve to illustrate whether solutions are more or less likely to be effective, even though she has a tendency to avoid making policy recommendations for how the issues might be addressed.

Bibliography

Holden, R. (2023, October 9). Nobel prize winner explains the gender pay gap. Australian Financial Review. https://www.afr.com/policy/economy/nobel-prize-won-for-explaining-the-gender-pay-gap-20231010-p5eb08 

Ball, P. (2023, October 9). Why women earn less than men: Nobel for economic historian who probed pay gap. Nature News. https://www.nature.com/articles/d41586-023-03190-4

Desk, W. (2023, October 11). Claudia Goldin’s Nobel journey: Breaking down the gender pay gap. The Week. https://www.theweek.in/news/sci-tech/2023/10/11/claudia-goldin-s-nobel-journey--breaking-down-the-gender-pay-gap.html