Claudia Goldin, the Henry Lee Professor of Economics at Harvard University, is advancing a new theory that she says could help people understand the continued persistence of the gender pay gap. While many argue that the disparities between how women and paid are primarily the result of direct discrimination — a difference that amounts to men earning more than 120 percent of what women do — Goldin believes that the biggest contributor to the pay gap may in fact be indirect. Women, according to Goldin, are more likely to work in environments that offer fewer hours but more flexibility in scheduling. Such jobs, it turns out, earn far less money per hour than similar work that requires more substantial time commitments.
What’s not clear, Goldin notes, is how exactly employers benefit from motivating people to work extra hours. Under current compensation structures, a working family would earn far more if one partner worked 80 hours in a week and the other partner no hours than if both partners were to work 40 hours each. From a purely financial perspective, in other words, traditional gender roles are effectively being reinforced.
Such discrepancies also vary vastly by profession. In health and science jobs, where workers are compensated more or less equally, regardless of hours worked, the ratio of women to men’s earning drops to a difference of about 11 cents for every dollar made. In business and finance jobs, by contrast, the discrepancy increases to about 22 cents for every dollar made.
According to Goldin, the best way to combat the gender wage gap could be for markets to offer employees less disproportionate compensation for working extra hours. By offering greater time flexibility to workers, she notes, both women and industries at large could stand to benefit.
Read the full story at Harvard Magazine.