The historic journey of women's economic emancipation since World War II - by Claudia Goldin, Nobel Prize in Economics 2023

Claudia Goldin was awarded the Nobel prize in economics 2023 for her trailblazing research on women in the labor market, making her only the third woman to win the prize and the first solo to do so. She has been instrumental in our understanding of why gender gaps exist and how female labor force participation has ebbed and flowed over the past 200 years, buffeted by social, cultural, political and economic factors.

Goldin documented the journey of American women from, in her words, holding jobs to pursuing careers. She described the changing roles of women over the past 50 years as “among the major advances in society and the economy". They've outpaced men in education, poured into the labor force, and have found work to be a fundamental aspect of their identity and satisfaction.

Yet, her research demonstrates, women still lag behind men in various ways — in their pay, their work force participation and the share who reach the top of professions.

A driving force behind the persistent gender inequality in the workforce has to do with the way work is structured, i.e. the greedy economy. Companies disproportionately reward long, inflexible working hours. The most glaring gender gaps, she argues, would diminish if employees had more control over where and when they work.

Historical reasons for gender disparities in the labor market

1.     Women’s “U-shaped” participation in the labor force

Goldin has shown that women's participation in the US labor force could be depicted by a U-shaped curve for the 200-year period from the end of the 18th century. We now know that this U-shape is in no way unique to the US and holds true in many other countries.

Historical sources do not give credit to women's work. Indeed, public records from the 1800s list the occupation of married women as "wife". Goldin uncovered other sources of data to show that, in fact, they often worked in agriculture and other family businesses without pay. A sizeable unpaid labor force dominated by women – often doing care and domestic work –completely unaccounted for, but indispensable to the functioning of the economy.

Industrialization made it less likely for married women to work (though single women often worked in factories). Unlike farming, manufacturing work was harder to do from home, foreshadowing the struggles balancing work and family life that mothers face today.

During the first half of the 20th century, transformations in societal values and norms, the shift away from manual labor to office work, increased female education and the diffusion of household technologies such as refrigerators and washing machines, which eased the burden of household chores, no doubt all contributed to greater women’s participation in the workforce.

Despite sustained economic growth throughout this period, Goldin's analysis reveals that this growth does not automatically lead to a narrowing of the gender gap in the labor market. But how can these differences be explained? Why is equality evolving so slowly? Goldin suggests one major reason: marriage.

Goldin noticed that legislation known as “marriage bars” often prevented married women from continuing their employment as teachers or office workers. This type of legislation peaked during the 1930s’ Great Depression and in the years that followed – but was not the only reason.

2.     The birth control pill: a key enabler in women's shifting career expectations

The expectations that women initially placed on their future careers also played an important role in the slow narrowing of the gender gap. At the beginning of the 20th century, women's educational choices were dictated by the prospect of working for only a few years before getting married and then exiting the workforce for good.

It wasn't until the late 1960s, with the introduction of the contraceptive pill, that women's employment and career prospects underwent a decisive shift.

Birth control removed one of the main reasons for early marriage and gave women more time to form their identities outside of the home. As a result, many women were deferring marriage and motherhood in favor of education and careers.

While the pay gap between men and women has narrowed considerably since the 1970s, it has not completely disappeared.

3.     Historical gender earnings gap

While significant progress was achieved throughout history, Goldin notes that closing the gender pay gap was not a linear process, but rather a succession of distinct phases of gap reduction, such as in the early 19th century with industrialization (for single women), then in the early 20th century with the rise of clerical work, and then again in the 1980s with the rise in women's educational levels. The latter phase has benefited above all from the widespread use of contraceptives and the rise in divorce rates.

Today, in high-income countries, the income disparity between men and women is somewhere between 10 and 20%, even though many of these countries have equal pay legislation and women are often better educated than men. What explains this? Parenthood.

With equal education and occupation, the pay differential between men and women is minimal at the start of working life. But once the first child arrives, the trend changes: earnings drop immediately and do not increase at the same rate for women with a child as for men. In a 15-year study of business school students at the University of Chicago, Goldin showed that pay gaps widened within a year or two of having a first child.

This motherhood effect can be partly explained by the very nature of today's job market, in which employees across a wide range of sectors are constantly expected to be available and flexible to meet employer demand. Those who cut back on hours for a time, or aren’t available on weekends or evenings, are at a disadvantage. Yet, since women tend to take on more family responsibilities than men, they find it harder to progress in their careers and increase their incomes.

Research in other countries confirms Goldin's conclusion: parenthood in itself explains most of the earnings differences between men and women in high-income countries.

Final thoughts

Claudia Goldin has disproved the conventional wisdom that women are paid less because they choose lower-paying careers, demonstrating that the pay gap is wider within the same profession, and most pronounced in higher-paying professions such as medicine and law.

Goldin shows that most of this pay gap reflects the high cost of "temporal flexibility", i.e., women working fewer or more flexible hours to allow them to raise a family. Yet flexibility and the option to work irregular hours are penalized in pay rates, and the lack of appropriate childcare systems in the US does not help.

Narrowing the gender gap would require a change in social values and norms, as well as flexibility in where and when work is performed. Consequently, continued progress over the next decade will depend on the restructuring of jobs to incorporate greater flexibility for all workers. This will benefit both women and men. Not surprisingly, Claudia Goldin has stated previously that such a change would require a fundamental remaking of the American workplace, “taking the whole thing down.”

While such a fundamental change may sound like a tall order, Goldin points out that the shift has already taken place in areas such as technology, science, and healthcare.