SuperFreakonomics Book Club: Ask Claudia Goldin and Larry Katz About the Male-Female Wage Gap

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In the previous installment of our virtual book club, Sudhir Venkatesh answered your questions about his research on street prostitution.

Now, moving on to another section of Chapter One, here’s your chance to ask a pair of researchers about a central and pressing fact of U.S. economic life: the enduring wage gap between men and women.

Claudia Goldin is the Henry Lee Professor of Economics at Harvard University and director of the National Bureau of Economic Research’s Development of the American Economy program. Lawrence Katz is the Elisabeth Allison Professor of Economics at Harvard and a research associate at the NBER. They are among the most esteemed economists in the world at sorting out labor questions, historical and present, especially when it comes to the male-female divide.

Here are a few sections of SuperFreakonomics in which we rely on their research:

For American women twenty- five and older who hold at least a bachelor’s degree and work full- time, the national median income is about $47,000. Similar men, meanwhile, make more than $66,000, a premium of 40 percent. The same is true even for women who attend the nation’s elite universities. The economists Claudia Goldin and Lawrence Katz found that women who went to Harvard earned less than half as much as the average Harvard man. Even when the analysis included only full-time, full-year employees and controlled for college major, profession, and other variables, Goldin and Katz found that the Harvard women still earned about 30 percent less than their male counterparts.

What can possibly account for such a huge wage gap? There are a variety of factors. Women are more likely to leave the workforce or downshift their careers to raise a family. Even within high-paying occupations like medicine and law, women tend to choose specialties that pay less (general practitioner, for instance, or in-house counsel). And there is likely still a good amount of discrimination. This may range from the overt – denying a woman a promotion purely because she is not a man – to the insidious. A considerable body of research has shown that overweight women suffer a greater wage penalty than overweight men. The same is true for women with bad teeth.

And:

Among the top fifteen hundred companies in the United States, only about 2.5 percent of the highest paying executive positions are held by women. This is especially surprising given that women have earned more than 30 percent of all the master’s in business administration (MBA) degrees at the nation’s top colleges over the past twenty- five years. Their share today is at its highest yet, 43 percent.

The economists Marianne Bertrand, Claudia Goldin, and Lawrence Katz tried to solve this wage- gap puzzle by analyzing the career outcomes of more than 2,000 male and female MBAs from the University
of Chicago.

Their conclusion: while gender discrimination may be a minor contributor to the male-female wage differential, it is desire – or the lack thereof – that accounts for most of the wage gap. The economists identified three main factors:

Women have slightly lower GPAs than men and, perhaps more important, they take fewer finance courses. All else being equal, there is a strong correlation between a finance background and career earnings.

Over the first fifteen years of their careers, women work fewer hours than men, 52 per week versus 58. Over fifteen years, that six-hour difference adds up to six months’ less experience.

Women take more career interruptions than men. After ten years in the workforce, only 10 percent of male MBAs went for six months or more without working, compared with 40 percent of female MBAs.

The big issue seems to be that many women, even those with MBAs, love kids. The average female MBA with no children works only 3 percent fewer hours than the average male MBA. But female MBAs with children work 24 percent less. “The pecuniary penalties from shorter hours and any job discontinuity among MBAs are enormous,” the three economists write. “It appears that many MBA mothers, especially those with well-off spouses, decided to slow down within a few years following their first birth.”

We write a lot more in the chapter about women’s wages, but this should give you enough ammunition to ask Goldin and Katz some good questions. Leave your questions in the comments section below and, as always, we’ll post their answers in short course. If you’re interested in reading some of the underlying research papers, you can find them here, here (with co-author Ilyana Kuziemko), and here (with co-author Bertrand).

Addendum: Katz and Goldin answer your questions here.

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  1. Trevey Davis says:

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  2. Mario says:

    What careers have the most equal pay for women, and which ones have the widest gaps in pay?

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  3. Banty says:

    It would be interesting to look at women who did not have children, and compare men’s salaries with women’s salaries.

    And do the same analysis including only men who did not have children.

    Married vs. single, and for men, and for women.

    And, finance alone may have been skewing the numbers given their extremely high salaries of late, if finance tends to have more men going into that field. Looking at the numbers again (and also breaking out for kids vs. no kids vs. gender) would be interesting.

    I’m an empiricist – when I read (or hear, in my engineering job) too much handwaving, I want folks to go back into the data and mine it more.

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  4. deron says:

    This is tangential, though maybe interesting thought.

    I know several men who are out of work. Their impression is that many employers seems reluctant to consider them when the employer perceives that they would be accepting a pay cut, or other measure of under-employment.

    This raises an interesting set of questions, though perhaps not significant. Are employers more willing to hire a female employee who is seeking perceived under-employment, than they are of men seeking under-employment?

    Societal acceptance of women’s career interruptions might condition employers to accept that women are more likely to accept or embrace a “step back”, while assuming that men won’t.

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  5. Anu Chitrapu says:

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    • Kadir says:

      Logic Fail!

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    • Simon says:

      “As a woman with an MBA from a top school I want to state that I definitely DO NOT work fewer hours than my male classmates even though I do have kids.”

      That’s a very nice self-assessment, but I’d like to hear what your employer thinks. After all, just about every employee thinks that they should be the employee of the month, every month. I mean for example, if a crime’s been committed, the very last person you’d expect to get a straight answer from is the one accused.

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  6. KarenS says:

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  7. Josiah Lambert says:

    Does the age difference between spouses account for any of this difference in compensation? Perhaps women who marry men somewhat older than themselves will have husbands with higher pay because they’ve been out in the workforce longer. When the couple has to make decisions about who will cut back on work to raise children or who will follow the other in a job transfer, I would expect that the younger, lower-paid spouse would work less or become the trailing spouse. In the latter case, the trailing spouse would have fewer opportunities to get ahead in most cases.

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  8. Travis L says:

    Some statistical information would be good, to further want Banty just said. I’d be curious to see how much the high end CEO-level wages skew male salaries. So my question is this:

    - what do the numbers look like when you control for other confounders? Why not compare M/F within the same career field? Does the male average get skewed by the highest end of the salary range (if 97% of C-levels are men, and they get paid the most, etc.)

    Thanks for the great work!

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