Photo via the Harvard Gazette
On Monday, October 9th, Harvard Economist Claudia Goldin became the first individual woman to win the Nobel Prize in economics for her work in women’s labor market outcomes. The award, alternatively titled the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel, comes with a prize of roughly $1 million, and is awarded to only one person or group each year.
In addition to providing novel insight into the mechanics of gender in the labor market, Goldin’s work is incredibly important to those outside of academia. A Nobel committee member, Randi Hjalmarsson, described her research as having “vast society [sic] implications.” Goldin combined economics and history for a cross-disciplinary research endeavor to explain why gender-based differences in employment and payment have changed inconsistently over time.
Goldin’s research explains phenomena from two hundred years ago until today. She provides an explanation as to why the gender pay gap, which had been closing gradually for decades, suddenly stopped and has subsequently remained the same for the last twenty years.
Figure 1: Women’s median hourly earnings in the US as a percentage of men’s median hourly earnings. Source: Pew Research Center IPUMS.
Since the early 2000s, women have earned roughly 82 cents for every dollar a man earns working the same job (as seen in Figure 1). Economists struggled to explain why the gap has not closed in over two decades, despite substantial progress in the late 1970s, 80s, and 90s. Some factors contributing to the disparity can be quantified, whereas others are more abstract or completely unknown. In March 2023, the U.S. Department of Labor claimed that roughly 70% of the gender wage gap was simply “unexplained.” Figure 2 displays this information graphically.
Figure 2: Measurable Contributors to the Gender Wage Gap. Source: U.S. Department of Labor Women’s Bureau Issue Brief.
Numerous research projects have endeavored to define other factors causing the wage gap. Some unexplained gap is likely from gender-based discrimination, which is difficult to measure and often unreported. However, most economists believe there is more to the issue, and that writing the gap off as “discrimination” is unproductive and inaccurate.
Some research has pointed toward state and federal family-leave policies as the source of the gap. Others have looked towards male- versus female-dominated fields to identify differences in working patterns between men and women. Within this climate of uncertainty and clashing views, Claudia Goldin’s work stands out and sheds light on these previously unanswerable questions. She first establishes that in the last 200 years, women had the lowest participation in the labor market during the Industrial Revolution, and the presence of women in the workforce has only increased since then. Women’s education levels sharply increased throughout the 20th century, and the introduction of accessible contraceptive pills made career planning much more manageable for women. These gains caused the pay gap to decrease substantially. By the 1980s, the gap was closing by roughly 1 percent yearly.
Unfortunately, as women adapted to fight systemic inequalities, the system adapted as well. By the early 2000s, the pay gap was not a result of women not being hired, but of women leaving the workforce years after being hired to start a family. Starting as young professionals, women were able to get the same jobs as men, but if they got married, women were expected to leave the workforce while men were not. This phenomenon is still very prevalent today and contributes to the wage gap significantly. If women decide to re-enter the workforce after having children, they are typically years behind men in their age group. They are forced to take lower-level, lower-paying jobs, and they may not be able to get their old jobs back at all. Goldin’s work illustrates this phenomenon clearly and shows how the expenses and forgone income of childcare have put women far behind men.
Figure 3: The Parenthood Effect. Source: © Johan Jarnestad/The Royal Swedish Academy of Sciences.
While this is her first Nobel prize, Goldin has also received the IZA Prize in Labor Economics, and the Mincer Prize for lifetime contributions to the field of labor economics. She was the first woman to be a tenured professor in the Harvard Economics Department, and she is currently the Henry Lee Professor of Economics at Harvard and a co-director of NBER’s Gender in the Economy group. Her research has and will continue to have substantial impacts for economists, businesses, and women across the globe.
This article was edited by Matthew Quirindongo and Abigail D’Angelo.