Just in time for today’s “Equal Pay Day,” one of Harvard’s renowned labor economists, Claudia Goldin, examines the gender wage gap and finds that differences in cumulative career hours worked accounts for the remaining gender pay gap beyond the lower-paying professions women tend to choose—e.g., social work versus computer programing.
“What…is the cause of the remaining pay gap? Quite simply, the gap exists because hours of work in many occupations are worth more when given at particular moments and when the hours are more continuous. That is, in many occupations earnings have a nonlinear relationship with respect to hours. A flexible schedule often comes at a high price, particularly in the corporate, financial, and legal worlds. A compensating differentials model explains wage differences by the costs of flexibility.”
In professions, like pharmacology and computer programing, where working part time or taking time off does not diminish productivity, Goldin finds little if any gender pay gap between comparable workers.
As Mark Perry and Andrew Biggs argue in today’s Wall Street Journal: if companies could hire comparable female workers at 77% of the cost of men, why wouldn’t they take full advantage of that until wages converged?