Nobel Laureate Claudia Goldin punctures myth that economic growth reduces gender differences in labour market

Earlier this week, Claudia Goldin, professor at Harvard University, won this year’s Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel — commonly referred to as the Nobel prize in economics. The citation stated that Goldin had “provided the first comprehensive account of women’s earnings and labour market participation through the centuries. Her research reveals the causes of change, as well as the main sources of the remaining gender gap.” That Goldin — whose pioneering work on understanding the key drivers of gender difference in the labour market — is only the third woman to win the economics Nobel since the award was instituted in 1969 is as tinged with irony as her work is full of insights.

Before Goldin started her work in the 1980s, there were several misconceptions about the role women played in an economy. For instance, it was commonplace to believe that as economies had become more industrialised and grown in size, women’s participation had gone up. In other words, a growing economy was seen as an automatic solution to raising women’s involvement in the labour market. Goldin showed that this was a myth. By studying US data going back two centuries — an achievement in itself — Goldin was able to establish a “U-shaped” relationship between the number of women in paid employment and the US economy’s growth. Goldin found that women’s engagement in the economy first went down (during the 19th century) as the US economy transitioned from agrarian to industrial, and then went up (in the 20th century) with rising education levels, growing scientific achievements (most notably, the development of the contraceptive pill), and evolution of social norms (especially about marriage and parenting).

The fact is, as the Royal Swedish Academy of Sciences also noted, over the past century, the proportion of women in paid work has tripled in several high-income countries, and yet, the percentage of women in paid employment continues to be far lower than men. Moreover, when women work, they usually earn less. Not to mention the widespread prevalence of the (acutely unfounded) notion that economic growth alone can automatically reduce gender differences in the labour market. Many developing countries — India, in particular — need to study this issue more closely not just because it is deeply unjust to half the human race but also because it is downright inefficient to not have the best woman for the job.