Economic Association Head: Key to Fixing Wage Gap Is Flexibility

Could flexible work schedules help close the gender wage gap? The president of the American Economic Association thinks so.

In her presidential address at the AEA annual meeting  (opens in a new tab) last week, Claudia Goldin said the difference in pay between men and women could be reduced if employers allowed employees more flexibility in choosing the hours when they work.

“The solution does not (necessarily) have to involve government intervention,” said Goldin, an economics professor at Harvard University. “It does not have to improve women’s bargaining skills and desire to compete. … The gender gap in pay would be considerably reduced and might even vanish if firms did not have an incentive to disproportionately reward individuals who worked long hours and who worked particular hours.”

According to the U.S. Census Bureau  (opens in a new tab), the median earnings of women working full time in 2012 was 77 percent of that of men working full time.

Goldin’s address is based on research she conducted looking at the salaries of men and women graduates of business and law schools. She found, for example, that while men and women MBAs had almost equal salaries when starting their careers, 10 to 16 years later women MBAs were found to be making 55 percent of their male counterparts’ salaries.

Goldin attributed the difference in pay for male and female MBAs to three things: a disparity in training before receiving the degree, career interruptions and job experience, and a difference in weekly hours. Two-thirds of the gap is a result of less time spent in the workforce. Why are women taking time out? Children, Goldin said.

Women working in industries such as business and law who take time out to raise a family often do so at a crucial time for their earnings potential. “Quite simply, the gap exists because hours of work in many occupations are worth more when given at particular moments and when the hours are more continuous,” Goldin said.

In other industries with more flexible schedules, such as healthcare and technology, the wage gap is less, she noted.

More flexible work schedules shouldn’t be seen as purely a women’s issue, Goldin said: “What the last chapter must contain for gender equality is not a zero-sum game in which women gain and men lose. Many workers will benefit from greater flexibility.”

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