The Royal Swedish Academy of Sciences announced on October 9, 2023, the 2023 Sveriges Riksbank Prize in Economic Sciences in memory of Alfred Nobel, popularly referred to as the Nobel Prize of Economics. This year, the prize is being given to Claudia Goldin, the Professor of Economics at Harvard University, for her work in advancing our understanding of women’s labour market outcomes.
Claudia Goldin (born in USA in 1946) completed her Ph.D. from the University of Chicago, Illinois, USA. She became the first woman to be awarded the tenure in the economics department of Harvard University. She is the author of many books including Understanding the Gender Gap: An Economic History of American Women (Oxford, 1990), and Career & Family: Women’s Century-Long Journey toward Equity (Princeton University Press, 2021).
Goldin’s Research and Findings
Goldin has analysed the participation of women in the labour market over the past 200 years. She further analysed why there is a pay gap between men and women that never closed down despite many women likely to be better educated than men in the high-income countries. Even though her research is based on the 200 years of data from the US, the findings of her research are applicable to other countries as well. She has demonstrated how and why gender differences in employment rates have changed over time.
Goldin’s research does not offer any solutions; however, it has allowed policymakers to tackle the deep-rooted problem. She has explained the source of the gap and how it has changed over time and how it has been varying with the stage of development. Hence, there could not be a single policy to tackle the problem. It is a complicated policy question for which the underlying reason has to be found in order to make a certain policy work.
Through rigorous investigation of the data of around 200 years, Goldin concluded that during the entire period, female participation in the labour market formed a U-shaped curve and did not have an upward trend. In the early 19th century, when the world transformed from an agricultural society to an industrial one, the participation of women in the labour market decreased. However, with the advent of the 20th century, with the growth of the service sector, the participation of women started to increase. This was due to the structural change and evolving social norms regarding women’s responsibilities for home and family. Besides, two other factors played a crucial role in women’s access to higher education and employment—the concept of marriage and the use of contraceptive pills.
By the beginning of the 20th century, around 20 per cent of women were gainfully employed. However, the share of married women was only five per cent due to the legislation called ‘marriage bars’. This type of legislation peaked during the Great Depression of 1930s, and further after that. Women’s expectations for their future careers were another reason for slow reduction of the gap between men’s and women’s rates of employment. Women, after becoming mothers had little expectations of having a long and fruitful career.
Goldin says that with the advent of easy-to-use contraceptive pills by the end of 1960s, women could exercise greater control over childbirth. This gave them the leverage to plan their careers and motherhood, and thus the opportunity to study subjects such as law, medicine, economics, etc., and venture out beyond service. Contraceptive pills played an important role in accelerating the revolutionary change by offering new opportunities and presently, women are able to keep themselves abreast in terms of education and fields of employment.
However, there is another persistent gap-the ‘gender-based pay gap’. According to Goldin, bulk of the earning difference between men and women in the same occupation, in the present-day scenario, arises with the birth of their first child. Earlier, men and women used to work in factories and their wages were dependent on the amount of work they did and the output. So, the pay-gap was not too high. This gap started widening when monthly pay contracts came into picture. As women had more responsibility of being a parent once a child is born, they had to face the brunt at work front in terms of slower rise on the pay scale.
According to the Nobel Prize website: “By studying how differences in income between men and women changed over time, Goldin and her co-authors, Marianne Bertrand and Lawrence Katz, demonstrated in an article from 2010 that initial earnings differences are small. However, as soon as the first child arrives, the trend changes; earnings immediately fall and do not increase at the same rate for women who have a child as they do for men, even if they have the same education and profession”.
Claudia Goldin’s research brought out the underlying factors and barriers which need to be addressed in the future to understand the women’s role in the labour industry.
Significance of the Work
Goldin’s research has provided important information about the status, role, and participation of women in the workforce. This work can be applied to make the government policies more gender-sensitive. It could prove to be effective in the implementation of birth-control programmes to enable women shape their careers.
Goldin emphasises the role of women’s education in promoting economic growth and increasing individual productivity. Developing countries such as India, therefore, need to invest proportionately in women’s education to make the present century the ‘Indian Century’.
About Nobel Prize for Economics
The Sveriges Riksbank founded the Nobel Prize in Economics with the assistance of a donation in conjunction with the Banks’s 300th anniversary, in 1968. This donation is used to award prize money every year in an amount equivalent to that awarded for the other Nobel Prizes. The prize was awarded for the first time in 1969. The Nobel Prize comes with a monetary reward of 11 million Swedish kronor (approximately US$ one million)
So far, this prize has been awarded 54 times to 92 economics laureates. Of the 92 awardees, only two women, Elinor Ostrom in 2009 and Esther Duflo in 2019, have received this prize. Goldin would be 93rd recipient and the third women to receive this honour. Past winners of this award include Friedrich August von Hayek, Milton Friedman, Amartya Sen, Abhijit Banerjee, and Paul Krugman, among others.
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