Tue. May 24th, 2022

We all know that there is a gap between the money that men earn and the money that women earn, but I did not quite realize how big that gap still is. Even in egalitarian Finland, men earn a third more than women. In the UK and US, men earn two-thirds more. In the Netherlands and Austria, men earn twice as much. In Japan, men earn four times as much as women.

These staggering numbers (from a 2017 study by economists Henrik Kleven and Camille Landais) does not refer to pay for doing the same job, but to the total gap in labor market earnings between men and women. That gap exists not only because women are paid less than men on average, but also because women do much more household work that is not paid at all.

While it is natural to think of such great inequalities as a problem of justice, it is also helpful to think of them as a problem of efficiency. If men as a whole in Japan earn four times more than women, what does that say about wasting female talent? (Before the matter, how many Japanese men would be brilliant stay-at-home dads, if only they had the chance?) Japan is an outlier among rich countries, but the same pattern can be seen all over the developed world.

Last week, the London School of Economics Pivot for equal representation in the economy, whose aim is to “find effective ways to improve representation of women and minorities at work”. One of his first research studies, which is still ongoing, aims to quantify the problem of untapped talent by looking at pre-pandemic data from a multinational company, which covers approximately 100,000 employees across 100 countries. The researchers, economists Nava Ashraf, Oriana Bandiera, Virginia Minni and Victor Quintas-Martinez, can compare the pay earned by equally experienced men and women. As one might fear, there is a gap: men are paid more on average than women.

What is counter-intuitive about the data is that the salary gap is reversed in some countries: women are paid more than men. And those countries are not the ones we can expect. These are places like Pakistan, where few women work in the paid workforce at all.

What does this explain? Simply put, in a country where the barriers to paid work for women are high, the few women who do have jobs at multinational companies are exceptionally good. These high runners are promoted and paid more than the average man.

This suggests that there are women outside the labor force who, if they did have paid work, would be far above average, even if they were not superstars. If the barriers to their labor force participation could be lowered, it would increase the productivity of the companies they employ.

“If you leveled the barrier,” says Professor Bandiera, “some men would move out of the workforce, some women would move in, and productivity would increase by 32 percent.”

That productivity increase – almost a third – is the average across all the countries studied; in places with particularly unequal labor force participation it is much higher. It’s quite a lot of money to leave on the table.

“Some people are good at some things and some with others,” Bandiera says. “But there is a big mismatch between that plant and how we actually assign roles. Gender is just the most obvious example of that mismatch. ”

With both economics and fairness pointing in the direction of greater equality, it is no surprise that we have seen some progress over the decades. However, that progress was slow.

Bandiera is hopeful that the pandemic, with its upheaval of the way we all work, can speed things up. But while we all love an optimist, recent research from the Institute for Fiscal Studies points to a grimmer conclusion.

When British schools closed in the spring of 2020, with many people trying to do office work from home, families shuffled the tasks to cope with the constant presence of children. Alison Andrew and her IFS colleagues found that in households where the father earned more than the mother, men did much less homework and less childcare than women, while doing more paid work and much more uninterrupted paid work. This is what economic logic can represent.

But even in households where the mother earned more than the father, women did more childcare, more housework, and less uninterrupted paid work than men. Economic incentives matter, but our gender expectations of who takes care of homework have their own perverse power.

There has been progress over time, especially in the educational achievement of women, who in the UK are now more likely than men to be university graduates. But this is a campaign that needs to be fought on many fronts. The inequality between men and women shows no signs of disappearing by itself.

Tim Harford’s new book is “How to Gather the World”

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