Maternity along with Claudia Goldin

- The bus! Run, Mum, run!
The air and the humidity of the cool drizzle is seeping into my face, while it starts to gain colour. We made it. Just. That damn green t-shirt. Yesterday we looked in the wardrobe and thought we had everything under control, but we ended up almost missing the bus. But we made it. I bend down for a hug and a kiss.
-I love you. Have a nice day at school!
I pick up the pace. I'm late, I’m going to be late for work, hurry up. I should stop at the petrol station. Oops, I didn't start the washing machine. I'll do it tonight. Quick. Claudia Goldin says that gender inequality starts at home...

In 55 editions, 93 people have been awarded the Nobel Prize in Economics. Claudia Goldin is the third woman to win the prize, and the first to do so alone, "for advancing our understanding of women's labour market outcomes". Although her work is positivist (it does not address normative issues related to policy design), by using both historical and economic insights, it contains many valuable ideas for designing effective public policies to reduce gender gaps. One of the important ideas she stresses is that to develop effective policies we must understand the source of the problem.

The Goldin curve

Goldin's research revealed that women's participation in the US labour force can be described by a U-shaped curve (Figure 1). By analysing data going back to the late 17th century, she showed that in the agrarian economy, women participated to a greater extent in the labour market (in agriculture, farming, etc.) because this type of work was much easier to combine with family care than jobs in the industrial era. It was precisely the rise of industrialisation that made it difficult to combine work with home care, a situation that greatly affected women who were married, since industrial work had a rather negative stigma (marriage bars). As a consequence, women's participation in the labour market decreased during the industrial era.

However, in the early 20th century, white-collar work began to emerge, slowly giving rise to what is known as “the quiet revolution": a gender convergence of labour market participation and a convergence, sometimes even superior, of women's educational attainment.

From the 1970s onwards, women's expectations and opportunities changed from wanting to have a job to wanting to have a career, resulting in many women of that generation investing in their education.

Another key factor in this "silent revolution" was the introduction and spread of birth control methods. The ability to plan family life delayed the age of marriage and the age at which women had their first child, time that was dedicated on education and career planning.

Figure 1: The U-shaped curve

Source: https://www.nobelprize.org/uploads/2023/10/popular-economicsciencesprize2023.pdf

In short, Goldin showed that economic growth should not always be associated with women's participation in the labour market, hence the U-shaped curve (Figure 1). There are other factors on both the supply and demand side that affect women's participation: social norms, labour market expectations and opportunities, reconciliation of home and family care...

Subsequent studies, such as this one with data from 1890-2005 from 14 industrialised countries, have confirmed the same U-shaped pattern of women's labour market participation.

Women's labour market integration and the wage gap

Despite the fact that women's education in developed countries has reached ratios similar to those of men, even higher in some professions, and that the gap in participation in the labour market has greatly improved, data suggests that wage convergence has not yet been achieved and has even become stuck in recent years. (OECD, 2023).

To determine why, Goldin looked at whether the gap was between occupations (because of a higher proportion of men in occupations that are better paid) or whether the pay gap was within the same occupation. She found that only one-third of the pay gap could be explained by a difference between occupations, while the other two-thirds occurred within the same occupation. Moreover, in higher paying occupations, such as business or health, the wage gap was much larger (Goldin, 2014).

In collaboration with Marianne Bertrand and Lawrence Katz, Goldin also found that in high- income countries, the gender pay gap within the same occupation is small at the beginning of the career. However, this changes with the arrival of the first child (known as the parenthood effect): women's earnings fall immediately, even if they have the same education and profession as men, and this gap cannot be closed for the rest of their working lives. The parenthood effect (Figure 2) can be explained by the fact that in many sectors, especially in those with higher pay, companies expect people to be constantly available and have flexible working hours (greedy jobs). It is usually women who take on a greater burden of family care, which hampers their career progression and consequently decreases their chances of higher pay.

Figure 2: The parenthood effect 

Source: https://www.nobelprize.org/uploads/2023/10/popular-economicsciencesprize2023.pdf

The gender gap in the Basque Country

And how is the Basque Country doing? According to the study by Iseak Diagnosis of the labor market in the Basque Country (II): Gender and Generational Gaps in Basque Employment despite the fact that in the Basque Country the integration of men and women into the labour market has been remarkable in the last decade, there is still a gap: in 2020 the employment rate of women was 67% and that of men 74%. The wage gap is also significant and its evolution over time shows no discernible signs that the trend will change: "The observed monthly wage gap is 14%. Approximately 73% of this gap is explained by the difference in hours worked between men and women, the rest is explained by differences in hourly wages". (Figure 3)

Figure 3: Gender pay gaps in the Basque Country: net monthly wages, hours worked and hourly wages. Data for 2020. 

Source:  ISEAK 

The study also reveals that gender gaps in the labour market are linked to family responsibilities that are placed on women: "In the Basque Country, it is estimated that maternity decreases, on average, the probability of working by 11 percentage points and aggravates part- time work once in the labour market. For men, paternity has no effect on access to employment. Only one third of women living as a couple with children under 5 work full-time (more than 34 hours per week). However, the percentage of men with children under 5 who work more than 34 hours per week is 67%".

Tackling this type of problem is fundamental for prosperity. Orkestra's Territorial Competitiveness framework establishes inclusiveness as a cross-cutting dimension that involves the structural context, economic-business performance and dynamic levers. If women are treated unequally in the labour market, it is not only a question of equity but also of economic efficiency. Reducing the gender gap and improving the integration of female talent in the labour market could surely bring us improvements in terms of wellbeing and competitiveness.

Well, at last, pfft, I seem to have made it to work on time. The meeting hasn't even started, how nice! Let's see if I have time to go to the toilet before I go in... well, no, I'm going straight in, I'll come out later anyway, I think I'll hold on. It won't be long....