Tag Archives: power couples

How do misogynistic employers learn a women is childless in a power couple so to not discriminate against them? How do they know?

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.@nzteu is right, student loans entrench inequality

Those of European ethnicity had a median net worth of $114,000, compared with $23,000 for Māori , $12,000 for Pasifika and $33,000 for Asians according to the latest Statistics New Zealand data just released.

The Tertiary Education Union made great play about how much of the low net worth of young people and others is due to student loans

Young people (aged 15–24) had the lowest individual median net worth of any age group – just $1,000. The most common debt for young people is education loans.

The union then goes on to say that

Median education loan liabilities are only one-tenth of Pākehā people’s median assets, but they are a quarter of Māori people’s assets and over a third of Pacific people’s assets (table 7.01).

The data shows that the households with the smallest median net worth have the largest median education loans (table 2.02). These loans make up nearly a quarter of their total debt (table 2.03).

Over a third of households within the poorest quintile of net worth have education loans, whereas less than a tenth of households in the wealthiest quintile have education debt (table 2.04).

In a nutshell, not enough people are going to university because of the prospect of repaying student loans and more would go if it were cheaper and that would reducing inequality. The explosion in tertiary educational attendance over the last generation, an increase of about 150% for the adult population aged 25 to 64 was not good enough to reduce inequality.

Free tuition at University is a hand-out to those already had a good start in life. It will be paid for by those who will never go because they do not have an above average IQ.

Low-cost student loans were supposed to be away to reduce inequality. Instead, they give a flying start to those of already above-average talents. If social justice is to mean anything, it does not involve giving freebies to those who already have a head start in life.

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The average student loan debt is about $14,000 while the lifetime earnings premium from university education is about $1/2 million in New Zealand.

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Source: Statistics New Zealand, Household net worth statistics: Year ended 30 June 2015.

Lowering university tuition fees and easing the terms of student loans simply means that those who do well at university will not have to pay back as much to the government. People who succeed at university already have above average IQs so they already had a good head start in life.

Charles Murray points out that succeeded at college requires an IQ of at least 115 but 84% of the population don’t have this:

Historically, an IQ of 115 or higher was deemed to make someone “prime college material.” That range comprises about 16 per cent of the population. Since 28 per cent of all adults have BAs, the IQ required to get a degree these days is obviously a lot lower than 115.

Cheaper higher education does not help the not so smart secure a qualification they lack the innate talent to earn with decent marks and increases the chance of smart men and women marrying. This increases the inequality between power couples and the rest.

@economicpolicy gathers more evidence of a waning gender pay gap @joshbivens_DC @eliselgould

As part of a large paper calling for massive government intervention, the Economic Policy Institute, impeccably left-wing, massed a considerable amount of evidence about the withering away of the gender wage gap and anomalies in what is left of that gap. None of these anomalies bolster the case for more regulation of the labour market.

The first of their charts showed the large reduction in the gender wage gap in the USA. Women’s wages have been increasing consistently over the last 40 years or so. The second of their tweeted charts shows that women of all races consistently outperformed men in wages growth, often by a large margin.

Their most interesting chart is about how the gender gap is not only highest among top earners, their pay gap has not fallen at all in the last 40 years. If anything, that gender wage gap is rising at the top end of the labour market albeit slowly. Progress in closing the gender gap been pretty consistent at the lower pay levels. That progress is certainly better than no progress at all.

gender gap largest among highest earners

Source: Closing the pay gap and beyond: A comprehensive strategy for improving economic security for women and families | Economic Policy Institute.

The Economic Policy Institute didn’t enquire in any detail into why women with the most options in the labour market had made the least progress in closing the gender wage gap.

None of their solutions such as more collective-bargaining and a higher minimum wage will help the top end of the job market.

There is an anomaly in the Economic Policy Institute’s reasoning. The women who would suffer least from a purported inequality of bargaining power inherent in the capitalist system and have plenty of human capital have had least success in closing the gender pay gap. These women can shop around for better job offers and start their own businesses. Many do because they are professionals where self-employment and professional partnerships are common.

The better discussions of the gender wage gap emphasise choice. Women choosing at the top end of the labour market to balance career and family and choosing the occupation and education where the net advantages of doing that are the greatest. As the Economic Policy Institute itself notes:

In 2014, the gap was smallest at the 10th percentile, where women earned 90.9 percent of men’s wages. The minimum wage is partially responsible for this greater equality among the lowest earners, as it results in greater wage uniformity at the bottom of the distribution.

The gap is highest at the top of the distribution, with 95th percentile women earning 78.6 percent as much as their male counterparts. Economist Claudia Goldin (2014) postulates that the gap is larger for women in high-wage professions because they are penalized for not working long, inflexible hours that often come with many professional jobs, due in large part to the arrival of children and long-standing social expectations about the division of household labour between men and women.

What the Economic Policy Institute does not explain is why these long-standing social expectations about the division of household labour should be strongest among well-paid women with plenty of options.

Among these options of high-powered women in well-paid jobs is the ability to buy every labour-saving appliance, hire a nanny and ample childcare and acquire everything else on the list of demands of the Economic Policy Institute on closing the gender pay gap. Something doesn’t add up?

Of course, the Economic Policy Institute discusses the unadjusted gender wage rather than the adjusted gender wage. When you study the gender wage gap after making adjustments for demographic and other obvious factors, it is clear that this pay gap is driven by the choices women make between career and family.

Claudia Goldin did a great study of Harvard MBAs using online surveys of their careers. This is the very group that according to the Economic Policy Institute have made the least progress in bringing down patriarchy in the labour market. Specifically, the overturning of traditional expectations about the marital division of labour in childcare and parenthood.

Goldin found that three proximate factors accounted for the large and rising gender gap in earnings among MBA graduates as their careers unfold:

  • differences in training prior to MBA graduation,
  • differences in career interruptions, and
  • differences in weekly hours.

The greater career discontinuity and shorter work hours for female MBAs are largely associated with motherhood. There are some careers that severely penalise any time at all out of the workforce or working less than punishingly long and rigid hours.

A 2014 Harvard Business School study found that 28 percent of recent female alumni took off more than six months to care for children; only 2 percent of men did.

Claudia Goldin found one counterfactual that cancels out the gender wage gap amongst MBA professionals: hubby earns less! Female MBAs who have a partner who earn less than them earn as much as the average MBA professional on an hourly basis but work a few less hours per week.

The gender wage gap is persisted in high-paying jobs because career women have so many options. Studies of top earning professionals show that they make quite deliberate choices between family and career. The better explanation of why so many women are in a particular occupation is job sorting: that particular job has flexible hours and the skills do not depreciate as fast for workers who take time off, working part-time or returning from time out of the workforce.

Low job turnover workers will be employed by firms that invest more in training and job specific human capital:

  • Higher job turnover workers, such as women with children, will tend to move into jobs that have less investment in specialised human capital, and where their human capital depreciates at a slower pace.
  • Women, including low paid women, select careers in jobs that match best in terms of work life balance and allows them to enter and leave the workforce with minimum penalty and loss of skills through depreciation and obsolescence.

This is the choice hypothesis of the gender wage gap. Women choose to educate for occupations where human capital depreciates at a slower pace.

The gender wage gap for professionals can be explained by the marriage market combined with assortative mating:

  1. Graduates are likely to marry each other and form power couples; and
  2. There tends to be an age gap between men and women in long-term relationships and marriages of two years.

This two-year age gap means that the husband has two additional years of work experience and career advancement. This is likely to translate into higher pay and more immediate promotional prospects.

Maximising household income would imply that the member of the household with a higher income, and greater immediate promotional prospects stay in the workforce. This is entirely consistent with the choice hypothesis and equalising differentials as the explanation for the gender wage gap. As Solomon Polachek explains:

At least in the past, getting married and having children meant one thing for men and another thing for women. Because women typically bear the brunt of child-rearing, married men with children work more over their lives than married women. This division of labour is exacerbated by the extent to which married women are, on average, younger and less educated than their husbands.

This pattern of earnings behaviour and human capital and career investment will persist until women start pairing off with men who are the same age or younger than them. That is, more women will have to start marrying down in both income and social maturity.

@EconomicPolicy showed gender pay equality when arguing the opposite @CHSommers @Mark_J_Perry

The Economic Policy Institute were good enough to dig out unit record data on the unadjusted US gender wage gap by percentiles. In attempting to show there was a persistent gender pay gap, the impeccably left-wing Economic Policy Institute showed that the unadjusted gender pay gap has all but disappeared in the USA.

There is next to no gender wage gap even in unadjusted terms towards the bottom of the labour market. This is despite all the protestations of the Left of an inherent inequality of bargaining power between the bosses and workers.

The low paid are supposed to be powerless unless unionised. Declining unionisation is a leading explanation on the Left of the rising income shares of the top 10%, top 1% in the top 0.1%.

If that inherent inequality of bargaining power trundled out at every opportunity by the Twitter Left explains anything in the labour market, this inequality of bargaining power should be operating with greatest strength at the bottom of the labour market.

Clearly the inherent inequality of bargaining power between the bosses and workers is not doing its job regarding the gender wage gap. The gender wage gap in the USA increases as you move up the income ladder rather than the other way around.

The explanation of the Economic Policy Institute for greater gender pay equality at the bottom is the minimum wage and male wage stagnation:

It is interesting to note that the wage gap between genders is smaller at the 10th percentile than at the 95th. At the 10th percentile, women earn 91 percent of men’s wages while women make only 79 percent of men’s wages at the 95th percentile.

The minimum wage is partially responsible for this greater equality among the lowest earners—it sets a wage floor that applies to everyone, which means that people near the bottom of the distribution are likely to make more equal wages. Also, low-wage workers are disproportionately women, which means that the minimum wage particularly bolsters women’s wages.

…Although women have seen modest wage gains in the last several decades, the main reason the gender wage gap has slowly narrowed is that the vast majority of men’s wages have stagnated or declined.

It is a bit rich for the Economic Policy Institute to praise the minimum wage as a force for increasing incomes after spending so much of its time saying how the minimum wage has fallen way behind wages growth in general.

The gender gap lingers at the top of the labour market despite the quite substantial wage gains  for women as compared to men over the past 15 years. The Economic Policy Institute dismissed the substantial gains as modest despite their own documenting of them.

It is even richer for the Economic Policy Institute to start extending the male wage stagnation hypothesis to the top 20% and top 10%.

The top of the income distribution has not been known previously known as victims of wage stagnation.

The gender wage gap remains stubbornly high at the top end of the US labour market at 20% for the last few decades. The gender wage is so large and has stayed large at the top half of the labour market  for the past few decades because of compensating differentials. Women on higher incomes are balancing families and careers in choosing the occupations that best suits each individual woman, their talents and educational choices.

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Source: OECD Employment Database.

Studies of top earning professionals show that they make quite deliberate choices between family and career. The better explanation of why so many women are in a particular occupation is job sorting: that particular job has flexible hours and the skills do not depreciate as fast for workers who take time off, working part-time or returning from time out of the workforce. Low job turnover workers will be employed by firms that invest more in training and job specific human capital.

  • Higher job turnover workers, such as women with children, will tend to move into jobs that have less investment in specialised human capital, and where their human capital depreciates at a slower pace.
  • Women, including low paid women, select careers in jobs that match best in terms of work life balance and allows them to enter and leave the workforce with minimum penalty and loss of skills through depreciation and obsolescence.

This is the choice hypothesis of the gender wage gap. Women choose to educate for occupations where human capital depreciates at a slower pace. This gender wage gap for professionals can be explained by the marriage market combined with assortative mating:

  1. Graduates are likely to marry each other and form power couples; and
  2. There tends to be an age gap between men and women in long-term relationships and marriages of two years.

This two-year age gap means that the husband has two additional years of work experience and career advancement. This is likely to translate into higher pay and more immediate promotional prospects. Maximising household income would imply that the member of the household with a higher income, and greater immediate promotional prospects stay in the workforce.

This is consistent with the choice hypothesis and equalising differentials as the explanation for the gender wage gap. As Solomon Polachek explains:

At least in the past, getting married and having children meant one thing for men and another thing for women. Because women typically bear the brunt of child-rearing, married men with children work more over their lives than married women. This division of labour is exacerbated by the extent to which married women are, on average, younger and less educated than their husbands.

This pattern of earnings behaviour and human capital and career investment will persist until women start pairing off with men who are the same age or younger than them.

In low-paying jobs, there is little in the way of trade-offs other than full-time or part-time work. Low-paid jobs do not involve choosing majors at university, choosing careers, industries and employers that call for long hours and uninterrupted careers or not so long hours, fewer human capital and promotional penalties for time off and more work-life balance. The choice hypothesis is the far better explanation for the persistence of the unadjusted gender wage gap in  the USA as Polachek explains:

The gender wage gap for never marrieds is a mere 2.8%, compared with over 20% for marrieds. The gender wage gap for young workers is less than 5%, but about 25% for 55–64-year-old men and women.

If gender discrimination were the issue, one would need to explain why businesses pay single men and single women comparable salaries. The same applies to young men and young women. One would need to explain why businesses discriminate against older women, but not against younger women. If corporations discriminate by gender, why are these employers paying any groups of men and women roughly equal pay?

Why is there no discrimination against young single women, but large amounts of discrimination against older married women? … Each type of possible discrimination is inconsistent with negligible wage differences among single and younger employees compared with the large gap among married men and women (especially those with children, and even more so for those who space children widely apart)

The main drivers of the gender wage gap are unknown to employers such as whether the would-be recruit or employer is married, their partner is present, how many children they have, how many of these children are under 12, and how many years are there between the births of their children.

The dating gap on campus

Will the standard policy response to a labour market crisis reduce inequality?

Whenever there is a crisis in the labour market, the standard policy response is send them on a course. That makes you look like you care and by the time they graduate the problem will probably fixed itself. Most problems do. I found this bureaucratic response to labour market crises to repeat itself over and over again while working in the bureaucracy.

The standard policy response to a normal problem in the labour market is send them on a course. Clever geeks as yourself sitting at your desk as a policy analysis or minister did well at university. You assume others will as well including those who have neither the ability or aptitude to succeed in education. Lowering university tuition fees and easing the terms of student loans simply means that those who do well at university will not have to pay back as much to the government. People who succeed at university already have above average IQs so they already had a good head start in life.

The standard solution to growing inequality is to send people on a course. Trouble is that just make smart people wealthier without helping the not so smart and increases the chance of smart men and women marrying off together. This increases the inequality between power couples and the rest.

How Some Women Benefit From Marrying a Man Who Makes Less Money – The Atlantic

marry poor chart.png

The large and growing gap is not due to timid female MBAs.

Some of it is attributed to different skills, jobs before the MBA, and that male business students typically take more finance classes and women more marketing classes.

But a majority of the difference is due to women taking time out of the labor force and then working less after having children.

Women without children usually don’t take time off, and most of their earnings disparity with men can be explained by differences in their skills.

It’s notable that the earnings of some women did not fall very much after they had children and any drop in income did not persist after a few years.

But these women often had a “lower” earning spouse (income under $100,000). A large and sustained drop in income is highly correlated with having children and a high-earning husband.

via How Some Women Benefit From Marrying a Man Who Makes Less Money – The Atlantic.

Women graduates increasingly put their partner’s career first after they graduate | Daily Mail Online

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Women are increasingly putting their husband’s career before their own, a controversial new study of Harvard Business School graduates has found.

It canvassed over 25,000 male and female students, and found 40 percent of Gen X and boomer women said their spouses’ careers took priority over theirs.

The researchers also said only about 20 percent of them had planned on their careers taking a back seat when they graduated.

This gender gap  found by Robin Ely, Colleen Ammerman and Pamela Stone can be better explained by the marriage market combined with assortative mating.

1. Harvard business graduates are likely to marry each other and form power couples.

2. There tends to be an age gap between men and women in long-term relationships and marriages of say two years.

This two year age gap means that the husband as two additional years of work experience and career advancement. This is highly likely to translate into higher pay and more immediate promotional prospects.

Maximising household income would imply that the member of the household with a higher income, and greater immediate promotional prospects stay in the workforce.

It is entirely possible that women to anticipate this situation both in their subject choices and career ambitions.

Claudia Goldin found that the wage gap between male and female Harvard graduates disappears in the presence of one confounding factor.

That confounding factor is obvious: the male in the relationship earns less. When this is so, Goldin found that the female in the relationship earns pretty much as do similar male Harvard graduates, except for the fact that they work less hours per week:

We identify three proximate factors that can explain the large and rising gender gap in earnings: a modest male advantage in training prior to MBA graduation combined with rising labour market returns to such training with post-MBA experience; gender differences in career interruptions combined with large earnings losses associated with any career interruption (of six or more months); and growing gender differences in weekly hours worked with years since MBA.

Differential changes by sex in labour market activity in the period surrounding a first birth play a key role in this process. The presence of children is associated with less accumulated job experience, more career interruptions, shorter work hours, and substantial earnings declines for female but not for male MBAs.

The one exception is that an adverse impact of children on employment and earnings is not found for female MBAs with lower-earning husbands.

This sociological evidence reported in the Daily Mail is entirely consistent with the choice hypothesis and equalising differentials as the explanation for the gender wage gap. As Solomon Polachek explains:

At least in the past, getting married and having children meant one thing for men and another thing for women. Because women typically bear the brunt of child-rearing, married men with children work more over their lives than married women.

This division of labour is exacerbated by the extent to which married women are, on average, younger and less educated than their husbands.

This pattern of earnings behaviour and human capital and career investment will persist  until women start pairing off with men who are the same age or younger than them.

via Women graduates increasingly put their partner’s career first after they graduate | Daily Mail Online.