Why Claudia Goldin won the 2023 Nobel Prize in Economics?

A major achievement of her work is correcting some misconceptions about women participation in the US labour force, which have long been taken for granted

By Dr Ahmed Rashad

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Claudia Goldin. AFP file
Claudia Goldin. AFP file

Published: Wed 22 Nov 2023, 7:31 PM

Last updated: Wed 22 Nov 2023, 7:32 PM

On October 9, 2023, Claudia Goldin, a professor of economics at Harvard University, was awarded the Nobel Prize in Economics for 2023, making her the third woman to win this prestigious award in economics after Esther Duflo and Elinor Ostrom, and the first woman to receive the prize as the sole laureate. It should be first indicated that the Nobel awards focus on contributions regardless of the gender factor. Despite her research interests as an economic historian, Goldin won the award in recognition of her research on women participation in the labour market in the United States.

A major achievement of Goldin’s work is correcting some misconceptions about female participation in the labour force, which have long been taken for granted. Her work, which combined economic history and labour market economics, demonstrated that such presumptions were not necessarily accurate. For instance, she explained that the assumption that economic growth alone would be sufficient for increasing female participation in the labour force was not accurate.

Comparing industrial countries with developing ones shows a disparity between the role of women in the labour market. As such, there was a perception that development, higher economic growth rates, and higher employment demand would automatically ratch up women integration and participation in the workforce. But, by studying the economic journey of women in the last 200 years and analysing it in an innovative statistical method, Goldin proved that economic growth in the United States was never necessary for accelerated female labour participation. Periods that were characterised by economic growth during the industrial revolution had not seen increased women participation in the workforce. And that economic growth and female participation in the labour force takes a "U-shaped curve". This means that women role in the labour market was high in the agrarian society, but the transition from an agrarian to industrial society decreased their participation, due to difficulties in balancing work and family life. Early industrial times were also marked by tough working conditions and poor working environment. Stigmatising women working in the factories also played a part in making women reluctant to join the labour market, despite economic growth and development, and higher labour demand during the structural economic transformation.

In the post-industrial era, the emerging role of the service economy, higher office work demand during the World War II and drafting of men as soldiers, as well as the introduction of contraceptive pills, all these factors led to a historic economic turn for women, as their participation had gradually increased after falling during the industrial revolution (Figure 1).

Goldin also showed why women labour participation was proceeding slowly, by highlighting the role of future expectations in young girls’ decisions regarding education and labour market access. She stated that young girls always looked at mothers from the previous generation (Figure 2). If mothers from the previous generation left the labour market after getting married and they did not return, young girls were not expecting to continue their careers for a long time after marriage. Consequently, young girls were not very keen on advanced education for a longer career. With legalising contraception and enacting modern legislations to support women after pregnancy, young girls discovered that they could return to the labour market even after marriage. Young girls, however, faced a difficulty in that the levels of education attained according to their projections about the previous generation were no longer sufficient for labour market access, and therefore women integration in the workforce was progressing slowly across the world.

Goldin tried to interpret the pay gap between men and women in the US, even though existing regulations require equal pay for both men and women and despite the fact that women currently have a higher education level than men. She coined the term of “greedy jobs”, which are jobs that require an employee to be always ready to work remotely after official working hours and during public holidays and be available around the clock. The job career and promotions for such jobs require uninterrupted work, which is likely to affect women job prospects after leaving the job market for marriage, pregnancy, and childcare. Thus, a gender gap emerged, due to men's continuous work and women's departure from and re-entry to the job market.

Interestingly, the gender pay gap in 1820, for example, was probably lower than its current level! The reason is that the economic and work systems at that time were not dependent on full-time work and employees as it is now, but rather on completing specific tasks, whether by a man or woman, such as producing a product and selling it to a vendor or consumer. This is even though equal pay was not a priority at that time.

On the policy implications side of Goldin’s research, a direct focus of the economic growth rate of the GDP — albeit important — does not necessarily ensure sustainable economic development, or higher female engagement in the labour market. Concentration on economic growth rates as a number is a narrow objective. It would be much more beneficial to adapt the economic strategy. It would also make more sense to focus on wider economic objectives such as improving productivity, increasing economic growth quality, promoting export complexity, and enhancing innovation and discoveries. Additionally, given the current applicable work structures, designing creative and flexible work policies whether in terms of remote work or flexible working hours could probably have a positive impact on reducing misallocations of human capital and optimising the role of female.

Dr Ahmed Rashad is assistant professor of Economics at Anwar Gargash Diplomatic Academy

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