Claudia Goldin, Professor of Economics at Harvard University, has won the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel for 2023 — popularly referred to as the Nobel prize in Economics. The Royal Swedish Academy of Sciences, which adjudicates on the matter, stated that Goldin has been awarded the prize “for having advanced our understanding of women’s labour market outcomes”.
Before her, only two women scholars — Elinor Ostrom in 2009 and Esther Duflo in 2019 — had won this honour since 1969, when this award was instituted. This is only the 26th time when this prize has been awarded to a single laureate. The award carries a prize money of 11 million Swedish kronor (or Rs 8.3 crore).
Who is Goldin?
Winning the economics Nobel might be her biggest honour yet but Goldin has been a trailblazer in the field. In 1990, she made history when she became the first woman to be awarded tenure in the economics department of Harvard University. Getting tenure implies having a permanent appointment as a university professor that can be terminated only under extraordinary circumstances.
Goldin has been a pioneer in studying the role of women in the economy and has written several books on the topic, such as Understanding the Gender Gap: An Economic History of American Women (Oxford, 1990), and Career & Family: Women’s Century-Long Journey toward Equity (Princeton University Press, 2021).
Why has she won the award?
While explaining why the Academy chose Goldin, the jury noted that Goldin had provided “the first comprehensive account of women’s earnings and labour market participation through the centuries. Her research reveals the causes of change, as well as the main sources of the remaining gender gap.”
The fact is that world over, women are vastly underrepresented in the labour market. In other words, compared with men, a lower percentage of women come out of home demanding work and a lower percentage hold jobs. Moreover, when they do join the workforce, they end up earning less than men.
What explains these results? What causes women to join the workforce and what causes them to leave it? Is it a linear relationship between economic growth and women’s involvement in the labour market? In other words, does the proportion of women with jobs always rise when an economy grows, or can it fall as well? What about the role of education, marriage and child birth? Similarly, how and why does the pay structure differ between men and women?
All these are important questions for any economy and its policymakers. To answer these, Goldin started looking at historical data in the United States. “Claudia Goldin has trawled the archives and collected over 200 years of data from the US, allowing her to demonstrate how and why gender differences in earnings and employment rates have changed over time,” said the Academy. What she found fundamentally changed the world’s understanding.
For instance, before Goldin’s path-breaking book was published in 1990, it was widely believed — based only on data from the 20th century — that there was a clear positive association between economic growth and the number of women in paid employment. But Goldin’s study showed this was not true.
“Goldin showed that female participation in the labour market did not have an upward trend over this entire period, but instead forms a U-shaped curve. The participation of married women decreased with the transition from an agrarian to an industrial society in the early nineteenth century, but then started to increase with the growth of the service sector in the early twentieth century. Goldin explained this pattern as the result of structural change and evolving social norms regarding women’s responsibilities for home and family,” said the Academy.
Similarly, Goldin demonstrated that access to the contraceptive pill played an important role by offering new opportunities for career planning.
On the topic of the earnings gap between men and women, data shows that despite modernisation, economic growth, and rising proportions of employed women in the 20th century, for a long period of time the earnings gap hardly closed.
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“According to Goldin, part of the explanation is that educational decisions, which impact a lifetime of career opportunities, are made at a relatively young age. If the expectations of young women are formed by the experiences of previous generations – for instance, their mothers, who did not go back to work until the children had grown up – then development will be slow,” the Nobel citation said.
Historically, much of the gender gap in earnings could be explained by differences in education and occupational choices. However, Goldin has shown that the bulk of this earnings difference is now between men and women in the same occupation, and that it largely arises with the birth of the first child.
“Understanding women’s role in the labour market is important for society. Thanks to Claudia Goldin’s groundbreaking research we now know much more about the underlying factors and which barriers may need to be addressed in the future,” said Jakob Svensson, Chair of the Committee for the Prize in Economic Sciences.
