In 2023, Claudia became the first woman to win the Nobel Prize in Economics on her own, recognised “for having advanced our understanding of women’s labour market outcomes.”
Why do women participate in the paid economy less than men? Does women’s participation in the labour force increase with economic growth? What policies can governments and the private sector implement to address these systemic challenges? These are some of the questions that Claudia Goldin investigates, which I will explore further in this article.
Interestingly, women’s participation in the economy has not been linear. Claudia Goldin suggests that women’s participation in the labour force decreased during the Industrial Revolution and follows a U-shaped curve.
Her research found that in the early stages of economic development, when most of the economy relies on subsistence farming, women’s participation in the labour force is high. However, as economies grow and industrialise, women’s participation declines. Goldin attributes this decline to social customs that limit women to household chores and care work, as well as men’s comparative advantage in manual jobs pushing women into unpaid household work. As economic development progresses further, the expansion of the services sector, where Goldin suggests women have a comparative advantage, draws women back into the labour market. Nonetheless, this does not guarantee that female participation will naturally reach the level of men’s.
The Parental Gender Gap.
Goldin shows that the gap in pay and labour force participation is largely due to childbirth. She identifies three main factors contributing to the earning gap: the “motherhood penalty,” the “price of being female,” and the “fatherhood premium.”
Remarkably, after having a child, a woman’s income often decreases, while fathers frequently see their incomes rise. Goldin suggests that people hold preconceived notions that after having a child, a woman will dedicate more time to caregiving, while a man will work harder to support the family. Therefore, she stresses the need for changes in social attitudes that discriminate against women.
Women and Men in Different Jobs
Goldin suggests that the labour market incentivises men and women to work differently. Her more recent work focuses on the low female participation rates in high-earning occupations that disproportionately reward long hours. She highlights the need to reform “greedy jobs”—those that pay well but require long and unpredictable hours and penalise career breaks—by introducing more flexible working arrangements like those found in IT and healthcare
To learn more about Claudia Goldin’s contributions to our understanding of female labour market dynamics I recommend watching her Nobel Laureate Video 🙂