Forward looking behaviour and occupational segregation

Rosen (2004) suggests that the engineering market responds strongly to economic forces. The demand for engineers responds to the price of engineering services and demand shocks such as recessions and defence cuts. Supply and enrolment decisions are remarkably sensitive to career prospects in engineering. Students also appear to use some forward-looking elements to forecast demand for engineers. Many students also change their majors in light on more information on whether the like their current choices and other news (Bettinger 2010).

This evidence of students use forward-looking elements to forecasting the occupational demand for human capital suggests that better information may improve these choices. The government has made a distributional judgment to expand the choices open to women. The growing evidence of relatively accurate forward looking decisions making by students suggests that they will respond to additional information on prospects in different careers.

college_return

In addition, earnings from some occupations are also more uncertain than others. The STEM occupations are an example where shortages and, in particular, surpluses are more common because durable goods industries bear the bulk of business cycle risk. There is also the political unpredictability of defence and R&D spending. Women seem to prefer jobs that are more secure. Some occupations have higher risks of injury than others. Fewer parents, and both single fathers and single mothers, in particular, enter these more injury prone occupations.

These gender-based preferences about hazards and uncertainties will lead to fewer women entering occupations that are more injury prone or more at risk to recessions and industry-specific downturns. Occupational segregation will still persist in the labour market in the relative absence of either discrimination or a gendered division of labour and household effort.

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Newer drivers of occupational segregation

There are important drivers of occupational segregation that are not related to either discrimination or a gendered division of labour. These newer drivers are strong enough to explain most of the gender differences in tertiary education attainment. These gender differences in tertiary attainment and the drivers behind them will be important determinates of the future occupational segregation and entry into male dominated professions.

An important driver of occupational segregation is modern technological trends ranging from ICT to the emergence of a larger service sectors that have worked to the comparative advantage of women. Many more service jobs and fewer jobs based on brawn have increased the returns to women of working more in the market. In addition, a range of personality traits and skills work to the advantage of women in some occupations more than others.

Another driver of occupational segregation is women have more occupation choices than men because of different personality traits and superior verbal and readings skills. The superior verbal and reading skills of teenage girls are the equivalent of ½ a year’s extra schooling (OECD 2012). Teenage girls also score higher on personality traits such as persistence. Teenage boys have many more behavioural problems. Boys do especially poorly in broken families (Bertrand and Pan 2013).

Jacob (2002) found that higher non-cognitive skills and larger college premiums for women accounted for 90 percent of the gender gap in higher education. Becker, Hubbard and Murphy (2010) found that differences in the costs of college for women and men are primarily due to differences in the distributions of non-cognitive skills and explain most of the world-wide overtaking of men by women in higher education.

percentage of degrees conferred on women by major

About 64% of recent New Zealand graduates were women but they have personality traits and verbal and reading skills that will be rewarded more in interactive professions and occupations. Women are pursuing these comparative advantages and maximising the rewards on their skills and natural talents. These differences in skills and talents will lead to different occupational and sub-occupational distributions and mixes as compared to men despite any differences arising from the gendered division of labour and effort and costs of care giving.

There are fewer women in STEM occupations because they have better options elsewhere to reward both their mathematical and scientific talents and their superior verbal and reading skills.

The wage premium for STEM occupations for women is much smaller because they have options elsewhere that reward all of their skills, not just their STEM related talents. Young women and well as young men do equally will in the STEM prerequisites. Women have more options is other higher power occupations that make full use of their more diverse talents.

Occupational segregation in the future in part will be driven the same factors behind much higher female tertiary educational attainment. Superior verbal and readings skills and greater persistence and self-organisation among women will make some occupations more rewarding for them as compared to males who have, on average, fewer of these innate talents.

The traditional drivers of occupational segregation

The main drivers of female occupational choice are supply-side (Chiswick 2006, 2007). This self-selection of females into occupations with more durable human capital, and into more general educations and more mobile training that allows women to change jobs more often and move in and out of the workforce at less cost to earning power and skills sets.

Chiswick (2006) and Becker (1985, 1993) then suggest that these supply side choices about education and careers are made against a background of a gendered division of labour and effort in the home, and in particular, in housework and the raising of children. These choices in turn reflect how individual preferences and social roles are formed and evolve in society.

gender pay gap in the OECD

These adaptations of women to the operation of the labour market, in turn, reflect a gendered division of labour and household effort in raising families and the accidents of birth as to who has these roles (Chiswick 2006, 2007; Becker 1981, 1985, 1993).

The market is operating fairly well in terms of rewarding what skills and talents people bring to it in light of a gendered division of labour and household effort and the accidents of birth. The issue is one of distributive justice about how these skills and family commitments are allocated and should be allocated outside the market between men and women when raising children. As in related areas such as racial and ethnic wage and employment gaps, these gaps are driven by differences in the skills and talents that people acquired prior to entering the labour market. …

The changing nature and scale of the gender gap

Developments in recent decades greatly increased the options for women to combine careers and family. The unadjusted gender wage gap is narrow while the gender education gap has reversed. The progress with closing the gender gaps in employment and education in recent decades makes the crafting of further gender-based policy interventions more challenging.

The remaining gender gaps reflect much more thorny issues such as work-life balance rather than mid and late 20th century concerns such as large gender differences in education participation and attainment, sex discrimination and full-time motherhood raising much larger families.

gender wage gap and birth of first child

Parental leave, early childhood education and child care subsidies have increased in New Zealand in recent years. Early childhood education spending is high in New Zealand by international standards but spending on child care subsidies is less generous (OECD 2012).

The main drivers of greater female labour force participation and greater investment in long-duration professional educations were access to reliable contraception, the rise of service sector and other jobs that depend on brains instead of brawn, the automation of housework with white goods, and rising incomes increasing the opportunity cost of having a large number of children.

This is a first in a series of blogs on occupational segregation and gender.

The biggest gender gap that dare not speak its name

Gender gaps in injuries and fatalities go beyond those industries demanding physical.strength.

accident compensation claims by gender

There are noticeable differences in the occupational choices of single people, parents, and single parents. Women choose safer jobs than men; single moms or dads are most averse to fatal risk because they have the most to lose. About one quarter of occupational differences between men and women can be attributed to the risks of injury and death.

All but 3 of the fatal workplace accidents in New Zealand in 2015 were men.

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Source: Accident Compensation Corporation,  Statistics New Zealand.

This gender gap in the risk of injury and death can lead to a significant gender wage gap because of the wage premium associated with these risks and in particular the risk of death as Viscusi explained.

The bottom line is that market forces have a powerful influence on job safety. The $120 billion in annual wage premiums referred to earlier is in addition to the value of workers’ compensation. Workers on moderately risky blue-collar jobs, whose annual risk of getting killed is 1 in 10,000, earn a premium of $300 to $500 per year.

The imputed compensation per “statistical death” (10,000 times $300 to $500) is therefore $3 million to $5 million. Even workers who are not strongly averse to risk and who have voluntarily chosen extremely risky jobs, such as coal miners and firemen, receive compensation on the order of $600,000 per statistical death…

Other evidence that the safety market works comes from the decrease in the riskiness of jobs throughout the century. One would predict that as workers become wealthier they will be less desperate to earn money and will therefore demand more safety.

A German study was able to reduce a raw gender wage gap of 20% to 1% after accounting for differences between gender in the risk of injury and death in addition to the usual factors. This 2007 study found that they were the 2nd study ever to make this adjustment.

The dark underbelly of the signalling value of engagement rings

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Source: Newmark’s Door: Some notes on comparable worth.

Time for an equal pay day for young urban males?

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Source: ‘Equal Pay Day for Young, Single Men’ to recognize the gender pay gap in favor of young, single, childless women – AEI | Carpe Diem Blog » AEIdeas.

To @paulabennettmp on poor @women_nz gender wage gap study; didn’t use Claudia Goldin’s research

Dear Deputy Prime Minister,

Earlier this week in your capacity as Minister of Women’s Affairs you sponsored research on the causes of the gender wage gap in New Zealand.

That just published research was seriously incomplete. The Ministry of Women’s Affairs advised today that they were aware of the work of Claudia Goldin but did not reference it.

MWA ignored the research of the world’s top female labour economist Claudia Goldin. Her research shows that the causes of the gender wage gap are completely different to what you have suggested in the research you launched earlier this week and calls for novel policy solutions that are in a completely different ballpark to those that you have raised this week.

When education and accumulated job experience faded away as the statistical explanation of the causes of the gender wage gap, which the research you launched confirmed, Goldin explored how the organisation of work drove what remains. She called this the last chapter of the gender wage gap.

She found that jobs where the willingness to work very long hours, very specific hours and/or maintain continuous contact with co-workers or clients are highly prized and disproportionately rewarded was central to explaining the gender wage gap for well-paid workers.

Both her research and that you sponsored this week shows that the gender wage gap is close to zero for the bottom half of the wage distribution but the wage gap is 20% or more for professionals in the top 10% of wage earners.

Rather than hypothesise that employers suddenly develop an unconscious bias against successful career professionals because they are female, Goldin looked deeply into how the organisation of work and design of jobs affected how workers were paid and how women made choices about their careers and what they majored in at university in anticipation of these demanding or rat race jobs.

Goldin referred to pharmacy as the most family friendly occupation in America because pharmacists are completely interchangeable and in America the great majority of them are employed by Walmart and other big companies. Few are self-employed. The only advantage of working long hours in the pharmacy profession is you are very tired at the end of the week.

Goldin contrasted that with law or finance sector jobs which are rat race jobs.

Rat race jobs such as these disproportionately reward people who are willing to work very long hours, work very rigid hours and/or show up whenever the client wants them anywhere in the world. These jobs also severely penalise even the shortest interruption in your career track. You come back reporting to the people you hired 12-24 months ago!

After starting on the same pay, large gender wage gaps in high-powered professional occupations emerge after 5-10 years into a career as successful professionals power up to become partners or highflyers.

Importantly, Goldin found one counterfactual to this large wage gap for high-powered professionals. If your husband earns less, there is no wage gap with your MBA classmates at Harvard but you do work fewer hours per week.

Goldin’s study of the Harvard and Beyond longitudinal study was corroborated by a study she did of the top 100 occupations in the American Community Survey. The gender wage gap is limited to rat race jobs.

Goldin argued that the last chapter of the gender wage gap dependents on changing the way in which we organise work.

That is a profoundly ambitious agenda because much of the way in which high-powered professionals must work long hours and be always on call for clients is from the demands of their clients. For example, you want your lawyer to show up in court on time every time and always be available to you when you are in trouble. The legal system does not work in any other way because of the possibility of urgent applications to court etc.

Women anticipate this because, as an example, female surgeons tend to specialise in areas where they can schedule operations in advance rather than having to rush in to perform emergency surgery.

I suggest to you that you should think more deeply about the quality of advice you have just received from the causes of the gender wage gap in New Zealand.

That advice to you is profoundly at odds with the latest thinking in modern labour economics on what the causes are and what the solutions must now be for the last chapter of the gender wage gap.

A postscript has the key publications of Claudia Goldin to show why she is the world’s leading female labour economist without a doubt. You were not advised of her findings.

Cheers,

Jim Rose

Selected publications of Claudia Goldin on the labour economics of gender

  • 2016 “The Most Egalitarian of All Professions: Pharmacy and the Evolution of a Family Friendly Occupation,” (with L. Katz), Journal of Labor Economics (forthcoming).
  • 2014 “A Grand Gender Convergence: Its Last Chapter,” American Economic Review 104 (April), Presidential Address, pp. 1091-119.
  • 2014 “A Pollution Theory of Discrimination: Male and Female Differences in Occupations and Earnings.” In L. Boustan, C. Frydman, and R. Margo, Human Capital and History: The American Record (Chicago: University of Chicago Press), pp. 313-48.
  • 2011 “The Cost of Workplace Flexibility for High-Powered Professionals” (with L. Katz), The Annals of the American Academy of Political and Social Science, 638 (November), pp. 45-67.
  • 2010 “Dynamics of the Gender Gap among Young Professionals in the Corporate and Financial Sectors” (with M. Bertrand and L. Katz), American Economic Journal: Applied Economics, 2 (July 2010), pp. 228-55.
  • 2008 “Transitions: Career and Family Life Cycles of the Educational Elite,” American Economic Review Papers & Proceedings 98 (May), pp. 363-69.
  • 2006 “The ‘Quiet Revolution’ That Transformed Women’s Employment, Education, and Family,” American Economic Review, Papers and Proceedings, (Ely Lecture), 96 (May), pp. 1-21.
  • 2006 “The Homecoming of American College Women: The Reversal of the Gender Gap in College” (with L. Katz and I. Kuziemko), Journal of Economic Perspectives 20 (Fall), pp. 133-56.
  • 2006 “The Rising (and then Declining) Significance of Gender.” In F. D. Blau, M. C. Brinton, and D. B. Grusky, eds., The Declining Significance of Gender? New York: Russell Sage Foundation, pp. 67-101.
  • 2004 “From the Valley to the Summit: A Brief History of the Quiet Revolution that Transformed Women’s Work,” Regional Review, Q1 vol. 14 (2004), pp. 5-12.
  • 2004 “Making a Name: Surnames of College Women at Marriage and Beyond” (with M. Shim), Journal of Economic Perspectives, 18 (Spring 2004): 143-60.
  • 2002 “The Power of the Pill: Oral Contraceptives and Women’s Career and Marriage Decisions” (with L. Katz), Journal of Political Economy 110 (August): 730-70.
  • 2000 “Orchestrating Impartiality: The Impact of Blind Auditions on the Sex Composition of Orchestras” (with C. Rouse), American Economic Review (September): 715-41.
  • 1997 “Career and Family: College Women Look to the Past.” In F. Blau and R. Ehrenberg, eds., Gender and Family Issues in the Workplace. New York: Russell Sage Press, pp. 20-58.
  • 1995 “The U-Shaped Female Labor Force Function in Economic Development and Economic History.” In T. P. Schultz, ed., Investment in Women’s Human Capital and Economic Development. Chicago, IL: University of Chicago Press, pp. 61-90.
  • 1991 “Marriage Bars: Discrimination Against Married Women Workers from the 1920s to the 1950s.” In Henry Rosovsky, David Landes, and Patrice Higonnet, eds., Favorites of Fortune: Technology, Growth, and Economic Development since the Industrial Revolution. Cambridge, MA: Harvard University Press, pp. 511-36.

 

The nuances of the gender pay gap