Women's Role in the Economy-BECKER

With Hillary Clinton a very serious candidate for the U.S. Presidency, Angela Merkel as Chancellor of Germany, and Segolene Royal who almost became president of France, women have clearly arrived as political leaders in Europe and the United States. More to the point of this essay, the increasing role of women in political life is a reflection of the general education and employment advance of women in many countries. Consider first education. Men in the United States who were born around 1930 were far more likely than women born at that time to attend college, whereas among those born 40 years later, about 10-15 percent more of the women than men went to college. Over twice as many men as women graduated a four-year college in that earlier cohort, while women in the later cohort were considerably more likely than men to graduate. Put differently, whereas in earlier cohorts women were much more likely to drop out of college, this pattern has sharply reversed, so that male students now are more likely to drop out. As a result of these trends, somewhere between 55 and 60 per cent of all students in American colleges are women. The same general trends in educational achievements of men and women are found in other countries with advanced economies. Nor is this trend restricted to advanced economies. An article a few weeks ago in the New York Times indicated that female college students far outnumber male students in the moderately poor Moslem country of Algeria, and many more of the judges and lawyers there are female. Even in the fundamentalist country of Iran, women now apparently outnumber men at universities, although shortly after the Iranian revolution in 1979, attempts were made to discourage women from getting a higher education. The subjects studied by women in high school and college are also converging to those studied by men. According to data presented by Golden, Katz, and Kuziemko (see "the Homecoming of American College Women: The Reversal of the Gender Gap in College", Journal of Economic Perspectives, Fall 2006 for these data, and some of the other data used in my discussion), girls are about as likely as boys to take physics and math courses in American high schools, and girls are more likely to take chemistry courses. Girls have better grades on average at all levels of education, while the dispersion in grades and performance is greater for male students. This means that male students are much more represented at the extremes of the school performance distribution: at very low as well as very high levels of school performance. The propensity of women to go to college exceeds that of men in part because the financial gains from a college education compared to stopping education after high school have been higher for women than for men. According to calculations by my colleague Kevin M. Murphy, in 1990 college-educated women had average hourly earnings that were about 65 per cent higher than the average hourly earnings of female high school graduates, while the difference for men was only about 58 percent. The financial gains to both men and women from attending college increased by a lot from the mid 1970's on, although after 1990 they increased more for men. During the past 60 years in all economically advanced nations, and in most developing countries as well, women began to work much more in the economy, and they acquired significantly more schooling, partly because birth rates declined sharply. As a result, women now have considerably more time that is free of household responsibilities. The American and other advanced economies also shifted away from manufacturing and toward services, where women have always been more likely to find employment. Discrimination in admissions to medical, law, engineering, and some other professional schools also declined, perhaps mainly under the pressure of the growing number of women who wanted to enter these programs. About half the students at medical and law schools in the United States are female, and their enrollments in MBA programs and engineering schools are also increasing rapidly. A larger fraction of employed women are now working full time compared to the situation 50 years ago. For example, about two thirds of women who graduated college in recent years work full time compared to about one third a few decades ago. The greater education and greater commitment to the labor force of women than in the past helped raise the annual earnings of women relative to men. Some estimates indicate that wives earn more than their husbands in over 30 per cent of families where both work, and the fraction of families in which wives are the main breadwinner has been growing at a brisk pace. Yet, women still on average earn less than men, and women are much less represented in the top deciles of the overall distribution of earnings. The next couple of decades should see a narrowing of both these gaps, but will they be eliminated? If, as is likely, women will continue to take time off from work to care for young children, and to miss work when their children get sick or need other special attention, that would continue to reduce both their average earnings relative to men, and their representation in the top of the earnings distribution. To be sure, the greater education attainment of women, and their better performance at school, would tend to raise their average hourly earnings above that of men. Their better education and school performance would battle against their household responsibilities in determining the earnings of women relative to men. Still, even if the average hourly earnings of women reached parity or surpassed that of men, it is unlikely even without discrimination against women that they will be as represented as men at the top of the earnings distribution. For while combining household with market activities hurts average earnings, it is a really strong hindrance to having enough time to make that supreme commitment to work that is usually necessary to achieve great financial success.

Comments

[Haris]

A couple of things make me think that the earnings gap will never be eliminated.
First, given that women are the only ones who can give birth, female employees are always going to carry the risk of having to miss time for pregnancy & birth. As a result, all other things being equal [education, performance, etc] between a male and female employees, the employer will want to be compensated for this additional risk of missed time, in the form of lower wages for the female employees.
Second, given that male education and performance dominate at both extremes [high and low], men have an advantage because there is a lower limit to earnings [$0] but no upper limit. Thus, men can't earn less than $0 [even though their marginal value may well be negative] but have an infinite earnings upside, which drags their average up. Meanwhile, women rarely approach either of these extremes and thus don't benefit from the lower limit. [As a thought experiment, consider a society where all women earn 50, and half the men earn 0 and the other half 100. For every female raise, any other women could get an offsetting paycut and the average wouldn't change. However, if a man making 100 were to get a raise, only other men making 100 could take a paycut, the remainder unable to make less than 0. Thus the male average benefits from the 0 limit.]
As a result of these two factors, I doubt that the male-female gap will ever be eliminated, or that it should.

[jimbino]

Correct, Harris.

The female employee is worth much less to the employer than the male employee, especially if young, implying fertile, and especially if single. This disparity is diminished in those companies that offer family or spousal benefits, whose number is fortunately diminishing, at least in the private sector. The result of these pro-natalist policies has been that young fertile women, married or single, were attracted to those jobs, like civil service and public-school teaching, that still offered non-merit sickness and breeding benefits—to those sinecures that not only don’t punish you, but which, like the dead airlines and dying GM, rewarded you for breeding in lieu of producing. No single young man in his right mind should ever consider joining a cohort like that. A single young man should instead start his own business, work for a start-up offering no benefits, or work on a contract, as opposed to employee, basis for a large firm, or for a firm too small (under 50 employees) to fall under the idiotic FMLA and other socialist programs set up to distribute the wealth of the productive childfree to the indolent breeders.

To me, it is truly sad that the lesbian, confirmed childfree or actually sterile woman will, through no fault of her own, be denied the superior pay and opportunity that the young man enjoys, because of the assumption that she may soon breed. The employer is, of course, prohibited from quizzing a young woman as to her breeding intentions, but the young woman is NOT prohibited from broaching the fact, or supplying the proof, of her sterilization, and she would be well-advised to do so during the employment interview. It seems that the best option for a woman in a non-breeder position would be to start her own company. I myself started as a rocket scientist in my 20s with “full benefits” at Rockwell. When I found out, very early, that those benefits represented pure theft of my income, I switched to doing the same work on a non-benefited contract basis, which has always paid a wage premium of at least 50%, and I never looked back.

[Jake]

haris mistakenly assumes that economic activity is a zero-sum game -- which, coincidentally, is a (terribly mistaken) major plank in the Democratic platform for the 2008 election.

[Haris]

...how, exactly, do I assume that?

[Haris]

...how, exactly, do I assume that? If you're referring to the thought experiment I offered, I didn't say that represents real life - it clearly doesn't. It was just offered to show why the male average is helped by the fact that income cannot fall below a certain threshold but has no upper limit.
You're right about the Democrats though.

[William Rhoads]

Why no mention of parents' attitudes toward college education, since they have some role in deciding about college education for their sons and daughters, and some role in paying for college education? Are there survey data over the years on parental attitudes about college education for daughters and sons?

And how has financing college education changed over time? Has that played a role in greater female college enrollment?

The posting acts as if girls make a decision on attending college and that is it. We all know that that is not true.

[Bruce G Charlton]

I thought this was a good discussion of the issues. However, from a biological perspective, it needs also to be remembered that men and women are not just intrinsically physically different, but also psychologically different.

This difference in male and female psychology is seen throughout the animal world and is related to a host of biological differences - humans are not exempted from these constraints.

This means that men and women will _never_ achieve *identical* outcomes in the employment market when they are treated exactly the same.

Idenitical men v women employment outcomes would be very difficult to attain (becuase there are so many differences in psychology), and could only be achieved (even in theory) by treating men and women systematically differently.

The common political assumption that any difference in outcomes between men and women should be assumed to be a consequence of prejudice/ discrimination is - for these reasons - both pernicious and potentially destructive.

The biological basis of these matters is accessibly reviewed in The Red Queen - by Matt Ridley (1994).

[junglegymn]

Women's advance at professional levels is quite uneven. While they have surged in law and medicine, the proportion taking the GMAT for entering MBA programs has stagnated at just under forty percent for the last fifteen years.

Regarding the disconnect between college and career, I recall a serious study published in a respectable educational research journal that found male college students remembering more of what they had learned some years later than did females. But I'm out in the jungle now and can't give you the citation until September.

[WOW Power leveling]

One puzzle remains is why women have better college grades than men.

Perhaps the women simply outperform the men.

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