Why Claudia Goldin’s Nobel win isn’t just about women in economics

This month, Claudia Goldin made history for being the third woman to win the Nobel Prize for Economic Sciences. As much as this is an outcome to be celebrated as a milestone for women in economics, as an economist, Goldin has shifted the world’s understanding of women’s labour market outcomes. Her influential research examines the reasons for the gender pay gap, and the educational, medical, and cultural progressions which prevent – or enable – women to work.

The recent introduction of paid parental leave changes to the House of Representatives is just one way to increase women’s workforce participation in Australia. But are there more ways for Australia to improve economic outcomes for women? This podcast examines Goldin’s research, and what it means for Australia – and especially, Australian women.

Links discussed on the podcast

• Announcement of Claudia Goldin’s Nobel win
• Career and Family by Claudia Goldin
• Greedy jobs, labour market institutions, and the gender pay gap by Kristen Sobeck
• On the Origins of Gender Roles: Women and the Plough
• Children and the Gender Earnings Gap: Evidence for Australia by Elif Bahar, Natasha Bradshaw, Nathan Deutscher and Maxine Montaigne

Transcript

Kat Clay: This month, Claudia Goldin made history for being the third woman to win the Nobel Prize for economics. As much as this is an outcome to be celebrated for women in economics as an economist, Goldin has shifted the world’s understanding of women’s labor market outcomes. Her influential research examines the reasons for the gender pay gap and the educational, medical and social progressions which prevent or enable women to work.

The recent introduction of paid parental leave changes to the House of Representatives in Australia is just one way to increase women’s workforce participation. But are there more ways for Australia to improve economic outcomes for women? So today on the podcast, we wanted to take a look at Goldin’s research, what it means for Australia and especially Australian women.

I’m Kat Clay, and with me are two self-confessed Claudia Goldin fangirls, their words, not mine. We’ve got associates, Natasha Bradshaw and Liz Baldwin. Welcome to both of you.

Natasha Bradshaw: Thanks, Kat, and welcome to Liz for the first time on the podcast.

Elizabeth Baldwin: Thanks, Kat.

Kat Clay: So I wanna talk a little bit about Claudia Goldin for the podcast listeners who might not know much about her, I mean, Tash, why do you like her so much? Tell us a little bit about her.

Natasha Bradshaw: Well, Claudia Goldin really pioneered the study of gender economics and brought it into the mainstream. She’s done, an incredible body of work, that has really changed things and changed the way we understand, labor force and women’s role in the workforce. The Nobel Committee raised three reasons, really why they thought she should win the prize. Do you wanna tell us a bit about those?

Elizabeth Baldwin: They highlighted three aspects of Claudia’s work, and the first is that she’s an economic detective. She did a lot of interesting archival research early in her career, pulling out, previously underutilized manufacturing records and agricultural records to sort of correct the invisibility of women in a lot of the official statistics. So very often in early records, women’s occupation would be recorded as wife. So their labor market participation was hidden.

And Claudia’s, work highlighted that a lot of those women were actually working in, on farms or in factories or, in other jobs. so she was able to correct the labor market participation statistics, and in doing so, she rewrote our understanding of women’s economic history. So that was the first part of her contribution. She was able to describe the evolution of women’s participation over time through many cohorts and many different phases of change. But then the Nobel Committee also highlighted the, contribution that she’s made to our understanding of gender gaps today. She pioneered, work highlighting the importance of children and the motherhood penalty in explaining, ongoing gender pay gaps. And she introduced the concept of greedy jobs

Kat Clay: Liz, I’m really interested in that concept of greedy jobs. Can you tell us what that is?

Elizabeth Baldwin: So these aren’t jobs that you are a greedy person if you take up. They’re jobs that are greedy by their nature. They’re jobs that creep and creep and wanna steal more and more of your time and pay a big premium if you are able to put in the hours and be on call. So a classic example is something like a high powered commercial lawyer.

Someone who is doing really long hours every week, might need to be on call, might but is getting a very high remuneration, because of that ability to work really long hours and put work ahead of, other commitments in life and those kinds of jobs are not very compatible with family life.

They’re not very compatible with being able to pick up a sick kid from school or, you know, be around to, an elderly parent to a doctor’s appointment or whatever the case may be. So Claudia’s work showed that in occupations that have these greedy characteristics where there’s a really high return to, being able to put your life on hold to go to work, those occupations, have a much higher gender pay gap. They tend to have much lower representation of women at the highest levels.

Natasha Bradshaw: And what Claudia does is, she looks at occupations that have gone through changes that have made them sort of less greedy. And the benefits that that’s had for women. So one of the, really great examples that she brings up is about pharmacy.So what we saw is that 40 years ago, most pharmacists were independent enterprises.

And that pharmacist would be expected to be available at all hours. And what we’ve seen over the past 40 years is this shift towards, bigger clinics, hospitals that deal with, you know, out of hours needs.

And so pharmacists have become much more substitutable between each other. You don’t just have one all to yourself. And the difference that that’s made to women is, is huge. So women make up a big proportion of the pharmacy labor force. it’s a very high paying industry.it’s actually the eighth highest paying occupation in the United States. Women are able to do that work because of these changes that have occurred that have made it, um, more flexible. And, so what you see now is that women in that industry can work part-time. They They can take gaps, out of their workforce when they have children and other things like that, and they don’t see a big penalty the way that you see in other areas. Claudia Goldin sort of points to is that there are other industries that could move towards that direction. Obviously there’s always gonna be some jobs that just have these time inflexibilities. You know, if you’re a CEO or a surgeon or a high powered lawyer, you know, it’s sometimes there’s, there’s gonna be these jobs, but there are a lot of industries that could move further in that direction.

Kat Clay: And that’s one of the premises from her book, Career and Family, isn’t it? That was on the Prime Minister Summer Reading List last year, and you were a big advocate for this book, Tash, as well as many of the other people in the office One of the things that she talks about in the book is that idea of, that flexibility that’s come out of the Covid pandemic.

Do you see this as a way, women can have more workforce participation in Australia?

Elizabeth Baldwin: It’s a really interesting one, Kat. We know that flexibility is really important and it’s, been a big part of explaining the increase in women’s workforce participation historically. But it can be a bit of a double-edged sword. On the one hand, more flexible jobs allow women to keep a toe in the labor market and, that connection through working part-time hours or from home, as you said, during the pandemic. But on the other hand, there’s some evidence that women’s disproportionate use of flexibility, Can be part of explaining the gender pay gap that we have today. And so part of Claudia’s research was showing that women are being penalized for taking the more flexible options, whether it’s through less access to training, promotion opportunities, whether it’s through just direct discrimination, Simply not being able to take on the types of greedy jobs that we discussed that are the really, high paying but inflexible jobs. And so I think when we’re talking about flexibility, it’s important to talk about it as an issue for both men and women, not just a tool for women. Increasing men’s access to flexible work is an important part of the story, but also a part that Australians aren’t very good at. There’s research showing that men’s men are less likely to request flexible work from their employers, and then when they do, those requests are more likely to be rejected. Normalizing flexible work for both men and women would be much more important than making it just a women’s issue.

Kat Clay: So Liz, following on from that, I mean, Goldin’s work has been looking a lot at the historical context of, of women’s stories, through time and looking at how they’ve participated in work. can you take us through a little bit of that and why it’s significant?

Elizabeth Baldwin: So Claudia highlighted the importance of looking at cohorts and changes in generations to understand the overall shift in women’s participation in the United States. She understood that. Women and young girls are making decisions about their education and their marriage and their employment in their teenage years, and those decisions stick with them basically for the rest of their lives. So she highlighted that for several cohorts of women. Up until about the 1950s or sixties, they were making decisions about their education pretty much based on the expectation that their lives would be a lot like their mothers, who mostly hadn’t worked outside the home while they were young. And so very often they weren’t going on to tertiary education, or if they were, it, tended to be outside some of the really, lucrative and prestigious fields like business law or medicine. But then she describes this quiet revolution in the 1970s where suddenly in the space of about a decade, women’s expectations shifted a lot, and they went from 35% in 1967, expecting to be employed at age 35 to 80% in 1979, which is a huge transformation in expectations. And associated with that, they then flooded into universities at much higher levels than before. That affected their employment prospects for the rest of their lives. So she highlights that we need to look at the decisions that,cohort of women is making at each point in time based on their expectations around them, and also based on the policies and the technology they have available to them.

Kat Clay: I mean, In that period of time you see the contraceptive pill come out and it’s something that Goldin has written about. Tash do you wanna explain that to us?

Natasha Bradshaw: What Goldin showed was that once the pill, not so much once it was developed, but once it became available to young single women, we saw this dramatic increase. In women’s rates of graduating university, we also saw an increase in the age of marriage. and this just comes from women being able to delay childbirth until they’ve completed other things that they wanted to do in their lives.

Kat Clay: So the more I read about Claudia Goldin, I’m really fascinated by this kind of research that she’s done. she’s a US researcher, though. I’m wondering how applicable this research is to the Australian context and if there’s any places where that kind of style of research has been applied here.

Natasha Bradshaw: It is very applicable to the Australian context. Of course we have different institutions and some of the reasons that things have changed in Australia are different to the US but a lot of it does follow the same trends. as early as 1912 women’s wages in Australia were set at 54% of men’s wages the rationale for this is that men need to support a whole family on their earnings. And women,need to support themselves and, and once they get married, not to support themselves at all. You know, we have these long standing norms that have dictated women’s labor force participation. So in 1969 and 1972, we had these major decisions about equal pay for equal work and equal pay for work of equal value. And Australia was quite early in bringing in those types of policies. Women’s workforce participation and differences in earnings, improved quite dramatically and sort of early compared to global standards. And then as in many other countries, like in the US the way Claudia Goldin documents, we’ve had this major increase in women’s participation in work, in their educational attainment and so on over time. But what we see now is this sort of stalling of that progression, similar to what we’ve seen in the US. You know, in Australia we have these same problems persisting. We still have a women’s participation rate, staying at about 10% below men’s. We have a gender pay gap for full-time employees of about 13%.

So part of it is this greedy jobs concept that Claudia Goldin talks about a lot. A researcher called Kristen Sobeck at the ANU has actually replicated that work in Australia. and even though we have quite different employment structures here, we still do see that greedy jobs outcome.

The way that we organize labor is a bit different. So there’s a lot more people in Australia on collective agreements than on individual agreements. In Australia Um,it’s about 60% of the workforce on those collective agreements compared to about 11% in the US. And that makes a big difference in that it compresses the distribution of wages because more people are on sort of standardized terms. of that, the the sort of greedy jobs explanation is a little bit less in Australia than it is in the US. of course, people in those more greedy jobs are much more likely to be on individual agreements that’s sort of part of the problem

Kat Clay: With the collective agreements, would you find that, some of the lower paid professions, such as, you know, with thinking about aged care, childcare, are they the kind of industries that are on these collective agreements? And we are seeing women working in these areas, but still getting lower pay?

Natasha Bradshaw: That’s right Kat. So those areas are actually often likely to be on, Award wages. so those are quite standardized. You still see kind of differences within occupations because people are in sort of different jobs.

Elizabeth Baldwin: The other important thing to note about those industries is that they tend to employ women who are experiencing other forms of disadvantage, like migrant women or women from lower socioeconomic backgrounds who may have had fewer opportunities for education. It’s important that we note that the Greedy Jobs phenomenon is really a phenomenon of highly educated women and for those cohorts of women experiencing other forms of disadvantage, other issues, access to education, access to childcare, policies for single mothers. other issues are more relevant for those cohorts.

Natasha Bradshaw: The other thing we know both internationally and in Australia is that really the thing that matters is having children, you know, women that don’t have children do very well in the labor force. So I’ve done some work previously, about the impact that children have on women’s labor market outcomes, specifically related to their total earnings.

And what we see is that when women have children, their earnings drop by about 55% relative to men’s. Men’s don’t really change at all once they have children. this burden really falls dramatically on women and it persists for a very long time. So we’ve shown that it persists for at least 10 years after they give birth to their first child. What you can do is look at how much that contributes to the total difference in men’s and women’s earnings in Australia. And what we showed is that it’s actually about four fifths of the total difference in earnings between men and women. Just because of this childhood penalty. and similarly work at Grattan previously has shown that if a woman today has a child, a 25 year old woman has a child, she’ll earn $2 million less over her lifetime because of having that child, to a man that has a child at, at age 25.

Kat Clay: So devil’s advocate here, I mean, is the choice for women who’d like to earn money, just not to have children.

Natasha Bradshaw: Well, I mean, this is what Claudia’s research is really about, right? It’s how do you make these trade offs and how do women deal with these different decisions. some women it might be deciding not to have children, but, that’s a pretty extreme thing to give up. A lot of people, get a lot of value from having children and, and it’s a, you know, really important part of their life and that’s more important to them than their earnings.

And, at the end of the day, what we’d like to see is, you know, less trade-offs having to be made.

Elizabeth Baldwin: Why should it only be women who are having to bear the, this cost, this economic cost of having children when, their partners in heterosexual relationships are not having to bear the same cost. And I think that’s one of the interesting things we haven’t discussed yet about Claudia’s research is the role of gender norms in understanding how these phenomenon, these greedy jobs, translate into worse economic outcomes for women.

Because there’s nothing about a greedy job that says, only men can do it and women have to stay home. But why is it that in so many cases, that’s the way households are organizing their lives when faced with these trade-offs? To understand that we have to look back a long way at the history of gender norms. And I know Tash, you have some thoughts about how gender norms have evolved.

Natasha Bradshaw: Yeah, so the thing about gender norms is that they take a very, very long time to change. And there’s a fascinating stream of research that really spawned, out of Claudia Goldin’s work, which looks at the kind of historic roots of gender norms and how they still perpetuate today. So one of my favorite papers is by Alberto Alesina and co-authors, and what they look at is different societies, in history and how they developed different agricultural practices. Some societies used typical shifting agriculture.

So, like hoes and other societies moved to using, a plow. Now a plow needs a lot more physical strength to operate than, um, handheld tools. And it’s also not very compatible with childcare, which has historically fallen more on women. What they show is that in these societies that tended to, specialize more in plow agriculture, historically women in those societies have had much lower labor force participation. Even today they show that those societies still have, women participating less in the labor market and also participating less, in entrepreneurship and,political circles.

Kat Clay: So looking more broadly at the Australian context, we’ve obviously got paid parental leave in the house of reps at the moment. That’s something that Grattan has advocated for in our research. It’s just one way that we can increase women’s workforce participation. Did you wanna talk a little bit about that and, and just some of the other policies that Australia could be doing in order to increase this as well.

Natasha Bradshaw: Paid parental leave, is a really excellent policy for targeting these problems, and specifically for targeting these issues of norms and starting to make that slow change. So Australia, in a paid parental leave in 2011, and that was 18 weeks of pay at the minimum wage for a primary carer, and two weeks leave called it dad and partner pay for secondary carers. Now a few changes were made by, the Coalition government, quite recently to that policy, but this week labor’s brought in, the House of Representatives some changes, their own. Now, what this policy is going to do is increase paid leave from 20 weeks to 26 weeks by 2026, and importantly, they’re going to make four weeks of that leave. Use it or lose it, leave that a secondary partner can take.

Kat Clay: I need to interrupt briefly there, because that sounds really familiar to something we mentioned in our report on paid parental leave. Um, the idea of use it or lose it, leave.

Natasha Bradshaw: That’s right. It was absolutely, um, one of Grattan’s recommendations in, Dad Days report. Actually this policy doesn’t go quite as far as, Grattan has called for. What we would like to see is actually six weeks of leave for each parent, and then the rest to be shared how they choose. The reason that, use it or lose it leave is so important is primary reason is relating to these gender norms. if their partner’s more involved in child rearing, then they have more time to work. it’s also beneficial for the child to have, two adults caring for it and, and forming an early bond. it’s really this kind of win-win

Elizabeth Baldwin: And the benefits can also multiply because we know that when women work, their neighbors, their peers are more likely to also take up employment. And the same applies for fathers. There’s some really interesting research from Norway showing that when a father takes up paid parental leave, their coworkers and brothers then become much more likely to take it up as well, because they’ve seen how it works, they’ve seen, the benefits that Tash discussed and it becomes normalized within that community. So paid parental leave is one of these really important tools that we have for shifting those, longstanding gender norms that Tash was talking about before.

Kat Clay: So what are some of the other areas that the Australian government and state governments can be looking at in order to improve women’s workforce participation?

Elizabeth Baldwin: Well, Kat, there’s a few areas where we’ve still got work to do. One is in childcare and we’re eagerly awaiting the release of the productivity commission’s draft inquiry into early childhood education and care next month. That should take a really good look at the affordability of childcare, but also the flexibility and availability. Because one of the key themes, from Claudia’s work that we were talking about before is is the importance of being able to be flexible with paid and unpaid work. And if your childcare provider is only open, Nine to five, Monday to Friday, you might not be able to take on different kinds of work. when that childcare report is released, it’ll be a good opportunity to take another look at childcare policy and Grattan has advocated strongly for this in the past. And the other area where we have more work to do is around workforce disincentive rates. So this is a bit of a complicated economic concept, but basically it’s a measure of what your effective marginal tax rate is. So if I go to work and I earn an extra a hundred dollars, how much of that am I keeping in my pocket after I pay taxes, after I pay childcare fees and after any benefits that I’m receiving, like family tax benefit is taken away. And statistics published in the employment white paper recently from the Commonwealth Treasury showed that for a woman earning, $50,000 if she was working full time, Her effective marginal tax rate is always over 50%. So that means that if she’s going from one day to two days, two to three or four to five days, she’s never keeping more than half of the extra money that she’s earning. And that’s a pretty strong disincentive to, an extra day. I love my job, but I don’t know if I’d be working to only keep 20 cents in the dollar. And I think addressing some of those financial disincentives is also a really important part of the story.

Kat Clay: Finally, for each of you, I mean, if there’s one thing that you take away from Claudia Goldin’s example in her life to your own work what is it?

Elizabeth Baldwin: One of the really important contributions of Claudia’s Goldin’s work, and the reason it’s so significant that it’s been acknowledged by the Nobel Committee is her style of research. She is, as we said before, a historical detective and she relies a lot on archival sources. She relies a lot on stories and piecing together people’s real lives and Leonora Risse reflected in a piece in the Conversation that this sort of storytelling and bringing, real life stories forward in economics is a really important part of what we should take from Claudia Goldin’s work.

Natasha Bradshaw: The other thing I, I always appreciate about Claudia Goldin’s research is she’s really honest about what things we can do and what things we kind of need to let happen. So the case of greedy jobs, she sort of says this is really, something that industries need to do and it will be better for everyone if they do that, but there’s not such a huge role for government intervention in terms of changing the structure of entire industries. And so it helps us really focus our attention on, policies that are more targeting, sort of changing gender norms and making it easier for women to work. and, you know, for all women to work. You

Kat Clay: Thank you so much Liz and Tash. It’s been excellent to talk about Claudia Goldin and why her Nobel Prize win isn’t just about encouraging women in economics. it’s so much bigger than that. So if you’d like to talk to us about this topic, please do find us on social media at Grattan Institute, and please, if you’d like to support our work, visit grattan.edu.au/donate.

As always, please take care and thanks so much for listening.