econ 133 { global inequality and growth gender inequality in the labor...

Econ 133 – Global Inequality and Growth

Gender inequality in the labor market

Gabriel Zucman

[email protected]

1

Econ 133 - Global Inequality and Growth Gabriel Zucman

What we’ve learned so far:

• Supply / demand determinants of wage inequality

• Institutional determinants: Changes in minimum wage, unions,market power

• All of this was silent on key dimensions of labor income inequality:between genders & ethnicities

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Roadmap

• The gender gap: definition and evolution

• Decomposing and explaining the gender gap

– Labor market participation

– Hourly wage

– Hours of work

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1 The gender gap

•Most extensive definition of the gender gap = difference btw laborincome of men & women

• Today, men earn on average about 1.75 times more than women inthe US

• Gender gap has declined since 1960s but still high and persisting

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100%

150%

200%

250%

300%

350%

400% 19

62

1966

1970

1974

1978

1982

1986

1990

1994

1998

2002

2006

2010

2014

Average pre-tax labor income of men aged 20-64 / women aged 20-64

Source: Appendix Table II-F1. - 5 -


100%

150%

200%

250%

300%

350% 19

79

1981

1983

1985

1987

1989

1991

1993

1995

1997

1999

2001

2003

2005

2007

2009

2011

2013

2015

Average labor income of all men aged 20-64 / all women aged 20-64, by age group

Source: Piketty, Saez and Zucman (2016)

45 to 64

20 to 44

All

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0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

1962

1966

1970

1974

1978

1982

1986

1990

1994

1998

2002

2006

2010

2014

Rea

l med

ian

pre-

tax

inco

me

($20

14)

Median pre-tax labor income: working-age men vs. working-age women

Source: Appendix Table II-B13.

Working-age men

Working-age women

Working age adults

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2 Labor market participation

Big increase in women’s labor force participation rates since WWII

• Doubling of rates of labor force participation for women from1950s to today

• Rise in participation stronger for more educated women

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68

Notes: Updated version of Figure from Blau, Ferber and Winkler (2014) based on data from the Current Population Survey available at www.bls.gov and Employment & Earnings, various issues.

30

40

50

60

70

80

90

1947 1952 1957 1962 1967 1972 1977 1982 1987 1992 1997 2002 2007 2012

Part

icipa

tion

Rate

(%)

Year

Figure 3: Trends in Female and Male Labor Force Participation Rates, 1947-2014(age 16 and over)

Males

Females

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Why did women labor force participation rise from 1950s to 1990s?

• ↗ real wages & educational attainment for women: substitutioneffect dominating income effect (↗ men’s wage)

• Greater availability of market substitutes for home work;development and dissemination of the birth control pill

• Demand shifts that favored occupations like clerical work

• But purely economic factors explain relatively little- 10 -


3 Differences in hourly wage

• Declining but still high hourly wage differentials between men andwomen, especially at the top

• Traditional explanation: human capital factors (= education andexperience).

• Important post-WW2, but don’t explain much today, because of

• 1. reduction in experience gap- 11 -


• 2. reversal of the education gap between men and women

•Women have now become more highly educated than men in theoverall population. In 2011, they earned

– 57 percent of bachelor’s degrees

– 61 percent of master’s degrees

– 51 percent of Ph.D’s

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• So what explains the hourly wage gap today?

• Role of unions has disappeared: same unionization rates today formen and women

• Difference in occupation & industry (≈ half of hourly wage gap)

• Discrimination

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If there was no difference in hourly wage across genders, then womenwould earn as much labor income as men

A — Yes

B — No

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4 Differences in hours of work

Subsistence of traditional division of labor by gender in the family →women bear greatest share of family responsibilities

• Direct effect: fewer hours worked (work force interruption;part-time work) → less labor income

• Particularly large effect of parenthood (Kleven et al., 2019) [alsoaffects hourly wage and labor force participation]

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Indirect negative effects of gender norms:

• Lower incentives to invest in human capital (esp. firm-specificskills) & reduced experience → lower hourly wage

• Knowing this, employers discriminate against women

• Sorting into high-flexibility-low-paying jobs (Goldin 2014)

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5 The glass ceiling

• Glass ceiling: women face barriers in entering the top levels of thelabor market

• Still very strong today in the US, despite fact that women aremore likely to have advanced degrees

• Potential explanations: high penalties for flexibility (shorter hoursand work force interruptions); discrimination

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0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50% 19

62

1966

1970

1974

1978

1982

1986

1990

1994

1998

2002

2006

2010

2014

Share of women in the employed population, by fractile of labor income

Source: Appendix Table II-F1.

Top 10%

Top 0.1%

Top 1%

All

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Ex.: Bertrand, Goldin, and Katz (2010) examine earnings of MBAswho graduated between 1990 and 2006 U. of Chicago business school

• Small gender differential at the outset of the career

• But by 10-16 years post-degree, men earn 82% more

• Two potential effects: lower labor supply of women over thecareer, in turn related to career-family tradeoffs

• Additional hourly wage gap (discrimt. + penalty for shorter hours)- 22 -


6 Summary

• Despite a convergence in rates of labor force participation, womenstill earn significantly less labor income than men

• Part of this gap owes to fewer hours worked, in turn reflectingprevalence of gender norms regarding division of labor within family

• Part of it owes to lower hourly wages, in turn reflecting penaltiesfor flexibility and discrimination

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References

Bertrand, Marianne, Claudia Goldin, and Lawrence F. Katz, “Dynamics of the Gender Gap for Young

Professionals in the Financial and Corporate Sectors.”, American Economic Journal: Applied

Economics 2014, 2 (3): 228–55. (web)

Blau, Francine D. and Lawrence M. Kahn, “The Gender Wage Gap: Extent, Trends, and

Explanations”, NBER working paper, 2016 (web)

Goldin, Claudia, “A Grand Convergence: Its Last Chapter”, American Economic Review 2014, 104

(4): 1091-1119. (web)

Kleven, Henrik, Camille Landais, Johanna Posch, Andreas Steinhauer, Josef Zweimuller, “Child

Penalties Across Countries: Evidence and Explanations”, American Economic Association P&P,

2019 (web)

Piketty, Thomas, Emmanuel Saez, and Gabriel Zucman, “Distributional National Accounts: Methods

and Estimates for the United States”, working paper, 2016 (web)

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http://gabriel-zucman.eu/teaching/BertrandEtal14.pdfhttp://gabriel-zucman.eu/teaching/BlauKahn16.pdfhttp://gabriel-zucman.eu/teaching/Goldin14.pdfhttps://www.henrikkleven.com/uploads/3/7/3/1/37310663/klevenetal_aea-pp_2019.pdfhttp://gabriel-zucman.eu/files/PSZ2016.pdf

The gender gapLabor market participationDifferences in hourly wageDifferences in hours of workThe glass ceilingSummary

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