The Nobel prize-winning gender pay gap research that’s helping to bridge the divide

Exploring the work of Claudia Goldin, pay equity, and the structural problems of modern work.

Claudia Goldin, an economic historian at Harvard University, was given the 2023 “economics Nobel” for “having advanced our understanding of women’s labour market outcomes”.

In “an astonishing act of timing”, Ms Goldin was informed of the news within a few hours of publishing a paper titled: Why Women Won, which laid out landmark moments in the US female labour movement from 1905 to now.

To borrow from the title of her most recent paper, today, we’re asking why Ms Goldin won.

An ‘economic historian’

According to Ms Goldin, at the outset of her career, economists mostly concerned themselves with the male or child labour – women were overlooked.

“They didn’t really know what women were doing,” said Ms Goldin, “and so that’s what I worked out.”

When asked how well known Ms Goldin’s work is among economists, University of Melbourne Associate Professor of Economics Michael Coelli said: “It’s hard not to come across her work given how important she’s been to that whole area of gender pay gaps and participation.”

“But it’s not the only thing she does. She also works on education and earnings as well. She’s a broader labour economist.”

When asked if Ms Goldin’s victory was surprising, Mr Coelli said: “Typically, they try to pinpoint a particular piece of work that has had a long-lasting effect on the profession.”

“Here, the reasoning seems different. It was about a woman who’s worked for a long time on a number of issues and brought them together in a really nice way. So yeah, it’s a little surprising.”

Much of Ms Goldin’s work has demonstrated how women have entered and fundamentally transformed labour markets. They have overtaken men in university enrolments, “poured into the labour force and found meaning in their work”.

However, according to Ms Goldin, pay inequities persist. A fact that says nothing about the competence of female employees – which Ms Goldin has demonstrated consistently – but a lot about the structure of the modern workforce.

Mapping the gap

Ms Goldin’s research has helped to add depth to the discussion around the role of preferences in contributing to the gender pay gap. Some suggest the pay gap is simply the result of gendered preferences for roles that naturally pay differently.

Ms Goldin’s work has helped to add nuance to the idea. “It’s a really hard one to unpack,” said Mr Coelli, “we see these decisions being made by females perhaps working in occupations that pay less. Is that choice purely preference, or is it in some ways also impacted by what’s going on in society?”

“The idea that it’s all just pure preference … I don’t think most people really believe it, to be honest.”

A major objection put by Ms Goldin to the idea of preferences being determinative of gender pay is that the pay gap can be high within the same or similar occupations and largest among the highest-paying industries.

A significant part of Ms Goldin’s work in the area has been to demonstrate that the pay gap is not constant. Rather, it tends to grow once women begin having children.

“It opens up over age – a little bit when people get married but a lot when people have kids,” said Mr Coelli.

Crucially, the gap continues to operate long after the child is born: “It seems to continue once the kids age, once they go to school, it still seems to be females altering their work, rather than males.”

The pressures of child rearing tend to fall on female workers. To use the words of The New York Times, Ms Goldin’s work showed that “women don’t step back from work because they have rich husbands … they have rich husbands because they step back from work”.

“All of this points more towards requirement rather than just pure preferences,” said Mr Coelli.

Getting to pay equity

“The converging roles of men and women are among the grandest advances in society and the economy in the last century,” wrote Ms Goldin, “but what must the ‘last’ chapter contain for there to be equality in the labour market?”

The answer: a restructuring of jobs and remuneration models.

“The gender gap in pay would be considerably reduced and might vanish altogether if firms did not have an incentive to disproportionately reward individuals who laboured long hours and worked particular hours,” Ms Goldin said.

It’s this kind of rewards system that has seen the preponderance of what Ms Goldin calls “greedy work”.

These are “the kind of jobs that demand long hours and around-the-clock availability while most caregiving responsibilities still disproportionately fall on women, and many working mothers opt to take jobs with higher flexibility and lower pay”, said PCMA.

Indeed, women are more likely to desire and opt for flexible working arrangements. Concerningly, however, data suggests working women are still reporting higher levels of burnout and stress, and women are increasingly likely to miss out on career progression opportunities because of their disproportionate adoption of such work arrangements.

“Although hybrid gives workers the flexibility to handle the demands of life, women using it to do just that might find themselves facing loftier and even more unrealistic expectations (from themselves and society) to do it all”, said Kristen Lipton in an article for Gallup.

According to Gallup, the true benefits of flexible working arrangements for women will likely not be realised until all workers begin taking advantage of them.

While change on the pay gap has been slow, Ms Goldin said she is “ever optimistic that this [the recent uptake in flexible working arrangements] will lead to some reasonably good things”.