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. Lisa says:

    When you compare apples to apples (ie a childless, college-educated 29 yr old female in an urban area to childless, college-educated 29 yr old man in an urban area), what’s the real wage discrepancy?
    Isn’t the real problem of the gendered wage gap that we keep getting statistics that aren’t controlling for the issues the obviously cause people to make decisions that affect their wages? If a mom chooses to leave the workforce for 5 years to be a parent, it is not exactly shocking that she would then have a tough time coming back into the workfore at or above her previous wage, nor is it shocking that she’d be less likely to vault up the “corporate ladder” in terms of pay. Right?
    Also, I’d love to hear about an apples to apples comparison of stay-at-home moms and dads to see if that still holds true.
    Finally, I’d be interested to see the new proportion of female to male primary household breadwinners these days.

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  2. Erik says:

    While I agree that there is tremendous economical benefit in raising children that become productive members of society, this benefit certainly should not be paid for by a private employer…unless one promised that their kids would work there.

    Choosing to take time off during one’s prime earning years to raise a family can make excellent economic sense. Children often feel an obligation to take care of their parents later in life.

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  3. sasha says:

    1. Are women being paid less because they take time off for kids, or are they being paid less because employers expect them to take time off for kids? If an employer puts you on the “mommy track” simply for being female, and pays you less or doesn’t promote you as often, perhaps when you do have a child, the fact that you’re already being paid less gives you less incentive to return to work.

    2. How would providing paternity leave benefits affect the wage gaps? Maybe women take more time off because their employers allow them to.

    3. I believe women on average get married and start families at a younger age than men. So, maybe women in their late 20s are working less because they are likely to have a baby at home, but men don’t have babies at home until they’re older. Do men cut back on hours when they first have kids? What is the ratio of hours worked between female MBAs with children and male MBAs with children? Is it possible that women incur more of a penalty for taking leave earlier in their careers?

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  4. Mark B says:

    Men are judged by their earning ability so they expend more of their resources to reap financial gain. Women are judged on their beauty so they use more of their resources to look more attractive. One only needs to look at who has more cosmetic surgery . There may still be some bias, however, I doubt the gap will close completely.

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  5. Dr. Manak says:

    I think it is fabulous that you plug your book every third of fourth blog entry

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  6. Rick says:

    I recall a study regarding salary negotiations during hiring. It showed that women were more likely to accept the first offer and men were more likely to reject the first offer and to ask for more money even if the offer was completely acceptable.

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  7. logan says:

    I recently read the book Why Beautiful People Have More Daughters which is essentially a brief introduction into the more fascinating aspects of evolutionary psychology. I find that some of the issues, when brought up with others, are very unpalatable.

    For example, one of the issues spoken of in the book is the prevalence of the wage gap between genders. If I remember correctly, the authors say that the difference is due to the fact that women are primarily concerned with their children’s well being where as men are more concerned with succeeding professionally. The point being that the psychology inherent in men and women is different; women are concerned with protecting their offspring where as men, at least subconsciously, know that their odds of passing on their genes is largely determined by their wealth/success. This difference, at least with the experiments they reference, supposedly explains 98% of the difference in earning between men and women which of course doesn’t do the standard models of prejudice and bias an favors. Of course I’m skipping all sorts of relevant details and paraphrasing from memory.

    My question is – is this at all a prevailing thought in this field or even a respected one? The people I’ve spoken with seem very unwilling to accept such an idea as is the case with many of the other issues in the book.

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  8. Neela says:

    Is there any evidence that differences in the level of specific vs. general knowledge partially explain the differences in was inequalities across industries and positions?

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