This year’s Nobel in Economics: A New Flavour
This year’s Nobel Prize Winner in Economics, Claudia Goldin, is a rare bird who has not only advanced our understanding of women’s labor market outcomes but has also catapulted economic history as a fascinating subject. When she was young the idea of peering through a microscope and discovering an entire world was fascinating. In college, though she was captivated by economics. Areas that have been neglected in economics like urban slavery, labor history of American women, have attracted her. Educational movements and their influence on American economy has been a major thrust of her economic research. The loss of microbiology is gain of economics! Her hall marks have been original thinking, intense investigation and clarity of expression & views, which is rare among economists. Harry S Truman, the US President had once said” Give me a one-handed Economist. All my economists say, ‘on one hand—‘then ‘but on the other— ‘
Her most influential papers are in women’s quest for career and family, coeducation in higher education, impact of pill on women’s career and marriage, women’s surnames after marriage as a social indicator, and the new life cycle of women’s employment. She realized that female workers have been largely overlooked in economic history and study how female force evolved and its role in economic growth. In her seminal work’ Understanding The Gender Gap (1990), she refutes the notion that the women’s employment advances were a response to social revolution, rather than long run economic progress. The present economic status of women evolved gradually over the last two centuries and that past conceptions of women workers persist. World War II was a watershed in the lives of American women and altered the way in which women were perceived as workers. Alluding to the Palmer Survey, she brings out how wartime work did not by itself greatly increase women employment. She also brought out how there could be differences in earning even if male and female workers are equally productive.
In a recent interview Claudia observed that gender will always be a difference. ‘No matter how many of these differences begin to fade, I do not think, they will ever go away entirely’. Different ways of life result from different choices men and women make, rather than from discrimination. She was more concerned with the modern concept of wealth of nations emerging by early 20th century, where human capital matters. And USA led the nations in mass propagation elementary education. The human capital century of USA was characterized by openness of the education system, forgivingness, public funding, nonsectarian character and gender neutrality. The founding fathers who signed the declaration of independence like John Adams, Benjamin Franklin, Thomas Jefferson and Benjamin Rush also wrote extensively about educational institutions. For them, education was fundamental for Americans ‘to perform their civic functions and to prepare them to lead the nation.’ However, Claudia brings out the dilemma the country faces how to give equal opportunity, being egalitarian and still keeping incentives and merit in place.
Her fascinating research delves in to both the supply and demand function of labor supply over the years. Behind the supply function, there are several variables and parameters of which the substitution and income effects are the most important. Increase in labour force participation depend largely on whether the substitution effect is greater than the income effect. On the demand side she notes that manufacturing goods demand more men than women while the reverse is true on the services. the supply side is dependent on fertility, household production technology and social stigma of women in labour force. She finds that job switches in the1920s to white collar work and huge increases in clerical and service sector employment showed that women in labour force were indistinguishable. The social stigma disappeared.
She brings out that where women find marriage to be unstable, wives will like to build their human capital. In such cases, the income effect may not be as strong as in a stable marriage with husbands having a steady income. Taking a historical perspective, she brings out how the supply side factors were more important, while during 1940-60 the demand side factors were more important. During 1960-80 the supply and demand side were sharing the load. Though she has not researched in to the period 1980-2000, her premonition is that the demand factors have regained more importance. Economic history for her is the continuation in to the past of what people are interested in today. It links together different periods, eras and years in a ‘seamless piece of cloth.’ She seems to echo the sentiments of TS Eliot in Four Quartets: ‘Time present and time past are both perhaps present in Time Future.’ Unlike John Maynard Keynes who wrote that’ in the long run we are all dead’, Claudia believes that it is important to study the long term trend, to fathom the present.
Nobel Prize in Economics was instituted by the Swedish Central Bank in 1969 to commemorate its 300th anniversary. It was won by a woman 40 years later by Elinor Ostrom for her analysis of economic governance, especially the commons ‘. Ten years later Esther Duflo got it for the ‘experimental approach to alleviating global poverty.’ By recognizing the marvelous historical sweep of America history of women’s labour market participation and outcomes and busting a few myths, this year’s Nobel in economics is both a recognition of women power and the fault lines that do not lend themselves easily to gender equality. Peter Nobel, the great grandnephew of Alfred Nobel was very critical about installing a Nobel prize in economics. He wrote: My great grandfather despised people who cared more about profit than about society’s wellbeing’. Alfred would have surely blessed Goldin for this rare honor.