The impact of Claudia Goldin’s work

Source: This post has been created based on the article “The impact of Claudia Goldin’s work” published in The Hindu on 11^th October 2023.

UPSC Syllabus Topic: GS Paper 2 Indian Economy — Indian Economy and issues relating to planning, mobilization, of resources, growth, development and employment.

News: This article discusses the work of Claudia Goldin on women’s participation in the labour market, recently awarded the Noble Prize in Economics, 2023.

Professor Claudia Goldin’s work is the first comprehensive account of women’s earnings and labour market participation through the centuries.

Read more – Claudia Goldin wins 2023 Economics Nobel Prize for research on workplace gender gap

She is only the 3^rd women to have won the Economics Nobel and the 1^st to do it solo.

What are the findings of her research?

Professor Goldin studied archives of about 200 years of USA to demonstrate how and why gender differences in earnings and employment rates have changed over time.

The most significant observation was that female participation in the labour market exhibits a U-shaped curve instead of an upward trend. In other words, economic growth did not translate to reducing gender differences in the labour market.

She demonstrated that several factors have influenced and still influencing the supply and demand for female labour. These include:

1) Opportunities for combining paid work and a family.

2) Decisions (and expectations) related to pursuing education and raising children.

3) Technical innovations

4) Laws and norms

5) Structural transformation in an economy.

How did female participation move between agrarian and industrial era according to her research?

The participation of married women decreased with the transition from an agrarian to an industrialised society in the early 19^th century. It started to increase again with the growth of the services sector in the early 20^th century.

According to her, following two factors form the basis of the claim that historically, there is no positive connection between female participation in the labour force and economic growth:

1) She observed that female participation in labour force was incorrectly assessed and incorrectly stated in public data.
According to her, the proportion of women in the labour force was much greater in the 1890s than was shown in the official statistics.

2) She also observed that prior to industrialisation in the 19^th century, women were more likely to participate in the labour force. This was because industrialisation had made it harder for married women to work from home since they would not be able to balance the demands of their family.

What made the female labour force participation increase?

The beginning of the 20^th century marked the upward trajectory for female participation in the labour force.

According to her, technological progress, the growth of the service sector and increased levels of education brought an increasing demand for more labour.

However, social stigma, legislation and other institutional barriers limited their influence. Two important factors in this regard, are, namely, marriage (the practice of firing and not hiring women once married) and prevalent expectations about their future careers.

How did marriage and prevalent expectations play a role in women’s employment rate?

In the early 20^th century, women were expected to exit the labour force upon marriage. Later, married women would return to the labour force once their children were older.

However, their lack of investment in education earlier in life was detrimental to their career.

The exit for an extended period after marriage explains why the average employment level for women increased by very little, despite the massive influx of women into the labour market.

Another pivotal factor was the introduction of birth control pills. This created conditions for women to plan their careers better.

However, this did not lead to the disappearance of the earnings gap between men and women.

According to her research, pay discrimination (that is, employees being paid differently because of factors such as colour, religion or sex) increased significantly with the growth of the services sector in the 20^th century.

Apart from this, she has also brought up the issue of couple equity in the house, and the importance of sharing housework.