June 10, 2007
Women's Role in the Economy
Women's Role in the Economy-BECKER
With Hillary Clinton a very serious candidate for the U.S. Presidency, Angela Merkel as Chancellor of Germany, and Segolene Royal who almost became president of France, women have clearly arrived as political leaders in Europe and the United States. More to the point of this essay, the increasing role of women in political life is a reflection of the general education and employment advance of women in many countries.
Consider first education. Men in the United States who were born around 1930 were far more likely than women born at that time to attend college, whereas among those born 40 years later, about 10-15 percent more of the women than men went to college. Over twice as many men as women graduated a four-year college in that earlier cohort, while women in the later cohort were considerably more likely than men to graduate. Put differently, whereas in earlier cohorts women were much more likely to drop out of college, this pattern has sharply reversed, so that male students now are more likely to drop out. As a result of these trends, somewhere between 55 and 60 per cent of all students in American colleges are women.
The same general trends in educational achievements of men and women are found in other countries with advanced economies. Nor is this trend restricted to advanced economies. An article a few weeks ago in the New York Times indicated that female college students far outnumber male students in the moderately poor Moslem country of Algeria, and many more of the judges and lawyers there are female. Even in the fundamentalist country of Iran, women now apparently outnumber men at universities, although shortly after the Iranian revolution in 1979, attempts were made to discourage women from getting a higher education.
The subjects studied by women in high school and college are also converging to those studied by men. According to data presented by Golden, Katz, and Kuziemko (see "the Homecoming of American College Women: The Reversal of the Gender Gap in College", Journal of Economic Perspectives, Fall 2006 for these data, and some of the other data used in my discussion), girls are about as likely as boys to take physics and math courses in American high schools, and girls are more likely to take chemistry courses. Girls have better grades on average at all levels of education, while the dispersion in grades and performance is greater for male students. This means that male students are much more represented at the extremes of the school performance distribution: at very low as well as very high levels of school performance.
The propensity of women to go to college exceeds that of men in part because the financial gains from a college education compared to stopping education after high school have been higher for women than for men. According to calculations by my colleague Kevin M. Murphy, in 1990 college-educated women had average hourly earnings that were about 65 per cent higher than the average hourly earnings of female high school graduates, while the difference for men was only about 58 percent. The financial gains to both men and women from attending college increased by a lot from the mid 1970's on, although after 1990 they increased more for men.
During the past 60 years in all economically advanced nations, and in most developing countries as well, women began to work much more in the economy, and they acquired significantly more schooling, partly because birth rates declined sharply. As a result, women now have considerably more time that is free of household responsibilities. The American and other advanced economies also shifted away from manufacturing and toward services, where women have always been more likely to find employment. Discrimination in admissions to medical, law, engineering, and some other professional schools also declined, perhaps mainly under the pressure of the growing number of women who wanted to enter these programs. About half the students at medical and law schools in the United States are female, and their enrollments in MBA programs and engineering schools are also increasing rapidly.
A larger fraction of employed women are now working full time compared to the situation 50 years ago. For example, about two thirds of women who graduated college in recent years work full time compared to about one third a few decades ago. The greater education and greater commitment to the labor force of women than in the past helped raise the annual earnings of women relative to men. Some estimates indicate that wives earn more than their husbands in over 30 per cent of families where both work, and the fraction of families in which wives are the main breadwinner has been growing at a brisk pace.
Yet, women still on average earn less than men, and women are much less represented in the top deciles of the overall distribution of earnings. The next couple of decades should see a narrowing of both these gaps, but will they be eliminated? If, as is likely, women will continue to take time off from work to care for young children, and to miss work when their children get sick or need other special attention, that would continue to reduce both their average earnings relative to men, and their representation in the top of the earnings distribution.
To be sure, the greater education attainment of women, and their better performance at school, would tend to raise their average hourly earnings above that of men. Their better education and school performance would battle against their household responsibilities in determining the earnings of women relative to men. Still, even if the average hourly earnings of women reached parity or surpassed that of men, it is unlikely even without discrimination against women that they will be as represented as men at the top of the earnings distribution. For while combining household with market activities hurts average earnings, it is a really strong hindrance to having enough time to make that supreme commitment to work that is usually necessary to achieve great financial success.
Women's Economic Role--Posner's Comment
I have very little to add to Becker's excellent discussion. One puzzle remains is why women have better college grades than men. One possibility is that colleges discriminate against men in admissions. For if colleges admitted blindly on the basis of academic prowess, they would keep admitting women until male and female grades were equal at the margin. The average grades of women might still be higher than those of men. But this would be surprising, unless most of the students in the applicant pool were women.
Discrimination against women in admission to college would not be irrational if male alumni are expected to be on average more generous donors, either because of higher average earnings or because, as Becker notes, men are likely to dominate the upper tail of the income distribution; alumni in the upper tail are likely to be disproportionately generous donors.
Another possibility, unrelated to current sex discrimination, but perhaps to historical discrimination against women, is "legacy" admissions. If alumni children are favored by college admissions officers (largely for financial reasons--admitting alumni children increases expected donations by alumni), and the alumni parents are disproportionately male because men used to go to college in higher numbers than women, this could explain why males are being admitted who are expected to be poorer students than women who could have been admitted in their place. However, given that alumni are likely to have an equal number of male and female children, this explanation would work only if alumni prefer their sons to be admitted to the same school.
Still another possible explanation for the higher average grades of female than male students is that men get as much out of college as women do even when male grades are lower, because there is more to college than academic performance and the "more" may be more valuable on average to men than to women. Male sports and other male social activities in college may build teamwork, and networks, that create more valuable human capital for men than these activities would do for women, perhaps because men will have greater participation in the labor market, where teamwork and connections are vital assets. On this view (proposed by Asher Meir in correspondence), male students substitute nonacademic for academic college activities, resulting in lower average grades that are, however, offset by the social human capital that they acquire from engaging in the nonacademic activities.
Whether the wage gap between men and women will continue to narrow because the ratio of male to female college students will continue to fall seems to me speculative. The ratio may not fall at all if colleges see advantages in the current ratio, though this would leave unexplained why it has fallen as far as it has already. If the ratio does not continue to fall, I do not see what would drive female wages up relative to male wages. Rising prosperity may actually induce many women to substitute household for market work, because diminishing marginal utility of money income, combined with higher income tax rates at higher incomes, would tend to make untaxed household income more attractive.