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. Bruce says:

    I’ve witnessed salary equality in some settings I or my family/friends have worked: specifically public-sector jobs where standard job classifications and salary schedules are followed (including teaching). Similarly, in firms where I’ve worked, in same job classes, particularly in engineering, pay for women and men is exactly the same.

    So in these kinds of jobs, would any long-term disparity really represent women stepping off the career track a while, or not even pursuing promotions in order to better balance work and family?

    Does the data suggest certain types of jobs demonstrate lessor or greater disparity, and perhaps for different reasons?

    A different question altogether is whether and why roles that (more so in the past) are typically associated with women may have lower pay scales, such as teaching and nursing.

    Thanks!

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  2. htb says:

    to Harold Cline (@12): Setting up a small business, e.g., during the dot com boom *is* “working”. It is typically working an enormous number of hours, as a matter of fact.

    In my experience, a dot com startup really did mean working 70, 80, or 90 hours per week, for months on end. There’s a reason that we had a room filled with bean bags and sleeping bags, food in the kitchen, a shower in the bathrooms, and a spare set of clothes in nearly every desk: It’s because the staff didn’t always manage to go home at night.

    Staying home to feed the baby has many wonderful social and relational benefits, but it is not “working” in the “getting paid for using your MBA” sense.

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  3. Christopher Strom says:

    I’ll echo both Banty’s and Bruce’s questions:

    To describe “gender inequity in pay scales” seems very broad without controlling for certain factors such as marital status, continuity of employment, and especially field of work. I would think that some fields would permit more discretion in the setting of pay (business managers with MBA) than others (engineers with PEs).

    Accordingly, do the data show varying gender inequity in pay across fields of work? And is the inequity consistent within a field or does it vary across employers? Is there even sufficient data to parse it in this way?

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  4. Jason says:

    Why not look at medians instead of averages? Averages can be scewed too easily by some very high wage earners.

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  5. elena says:

    I’ve just read Freakonomics…what an amazing book! Congratulations from Gijón, Spain

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  6. dave says:

    Interesting, what I just read was that women do a better job of jprioritizing what is important as they age (i.e. job vs. family). I’d love a tangental analysis of these same groups and life expectancy, I bet it would be eye opening….

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  7. Kathleen says:

    So you’re saying that men don’t love kids?

    from the article –
    “The big issue seems to be that many women, even those with MBAs, love kids. “

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  8. Bowen says:

    You stated a major reason for the discrepancy of male-female wages was a woman’s “love for kids”. Have you considered that this “love for kids” is acutally a manifestation of societal norms requiring the woman to play an active role in the child-rearing process. I would like to see data for the men who take over the traditionally female role of rearing their kids. Is there a discrepancy there as well? If yes, societal norms might be a more accurate reason as compared to female discrimination.

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