Gender Gap News

Hat-tip to Vanessa: the New York Times reports a new study about the US wage gap reveals that in the last ten years, there has been no progress for women with college degrees.

[Link] “Nothing happened to the pay gap from the mid-1950s to the late ’70s,” said Francine D. Blau, an economist at Cornell and a leading researcher of gender and pay. “Then the ’80s stood out as a period of sharp increases in women’s pay. And it’s much less impressive after that.”

Last year, college-educated women between 36 and 45 years old, for example, earned 74.7 cents in hourly pay for every dollar that men in the same group did, according to Labor Department data analyzed by the Economic Policy Institute. A decade earlier, the women earned 75.7 cents.

In other words, the 5.5-point decrease in the wage gap since 1990 was real, but driven mostly by convergence in labor participation rates and increases in equality in education, rather than by decreases in the level of discrimination.Echidne deals with the angle offered in the article about opting out, that is the decreases in American women’s labor participation rates in the earlier years of this decade. She deals well with the angle of cultural pressure on women to work part-time instead of full-time or to stay home with the kids.

But there’s a more straightforward angle that is surprisingly often neglected: labor participation rates go down in times of economic downturn. The statistics about American women’s labor participation rates aren’t out of the ordinary for cycles of boom and bust, counting jobless recoveries as busts.

In addition, there’s a substitution effect. Single mothers and mothers whose husbands already work need to pay for daycare or a nanny, which slashes their net income by several thousand to several ten thousand dollars a year. On top of that, the second income earner pays higher marginal taxes. In a 2001 article trumpeting the opt out revolution, the San Francisco Chronicle acknowledged that,

[Link] Soaring child-care costs was one reason Misha Safran-Doig, 33, of Clayton quit her teaching job to stay home with her five children.

“I was paying $1,800 a month in day care for the three little ones,” she said. “It came down to: Do I work and pay day care and not have anything left over or stay at home. . . . I decided I’d rather struggle and be with my children than be at work and struggle.”

Strictly speaking, there are two gender gap figures that matter. One is the gross figure, comparing the mean (or median) annual incomes of men to those of women, without controlling for anything including employment status. That figure measures women’s level of economic empowerment, reflecting the fact that in a society where women have 60% of men’s employment rate and 90% of their wages, the level of economic inequality is the same as in a society where women are employed at 90% of the male rate but make 40% less if they work.

The other is the occupation-, qualification-, and experience-controlled figure. The New York Times article cites research saying that this figure has remained steady at 91% in the US since 1990.

Interestingly, the analogous Swedish figure is 92% (p. 80 in the PDF); in other words, Sweden’s economic policies have succeeded in reducing the gaps in labor participation, which spill over to the full-time wage gap via experience, but not in reducing discrimination. Since Sweden’s policies are nearly optimal when it comes to gender, it suggests that once the gender gap shrinks to about 10%, government policy will no longer be able to reduce it rapidly.

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