Flexible work hours may be the key to solving wage gaps


A paper from the American Economic Review thinks it has some more insight into the cause of the gender wage gap. It’s not sexism, employer discrimination, or really even children. It’s the flexibility (or lack there of) of work hours.

The converging roles of men and women are among the grandest advances in society and the economy in the last century. These aspects of the grand gender convergence are figurative chapters in a history of gender roles. But what must the “last” chapter contain for there to be equality in the labor market? The answer may come as a surprise. The solution does not (necessarily) have to involve government intervention and it need not make men more responsible in the home (although that wouldn’t hurt). But it must involve changes in the labor market, especially how jobs are structured and remunerated to enhance temporal flexibility. The gender gap in pay would be considerably reduced and might vanish altogether if firms did not have an incentive to disproportionately reward individuals who labored long hours and worked particular hours. Such change has taken off in various sectors, such as technology, science, and health, but is less apparent in the corporate, financial, and legal worlds. [Emphasis mine.]

The data from this paper is fascinating, and challenges quite a few pre-conceived notions we have about women in the work place. For example, we often think of jobs in the sciences, medicine and maths as being most off-limits to women, but in fact, women make up roughly half of today’s medical graduate enrolments, and actually women lead men in study areas including biological sciences, optometry, and pharmacy.

What’s even more interesting is that the gender pay gap is at its lowest in the tech and science industries. The gap begins to widen when you look at the health industry, and it spikes when you look at the business industry.

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The paper, “A Grand Gender Convergence: Its Last Chapter” argues that this is because the tech and science industries are more suited to flexible work hours, presumably because the quality of one's work output is based on results; whereas the business industry demands the constant slog of long work hours and 'face-time' - things which their clients have come to expect, and things that can be much harder for women to do if they are trying to manage both a family and a job at the same time. Claudia Goldin, author of the report, notes "a flexible schedule often comes at a high price, particularly in the corporate, financial, and legal worlds...there will always be 24/7 positions with on-call, all-the-time employees and managers, including many CEOs, trial lawyers, merger-and-acquisition bankers, surgeons, and the US Secretary of State. But, that said, the list of positions that can be changed is considerable."

Workplace culture has been changing for years– jeans, pets, and company-sponsored Red Bull fridges are becoming widely established. A move towards flexible hours is becoming more relevant too, especially in some of the most innovative industries. Perhaps our best bet to solving wage gap issues is to encourage employers to adopt more flexibility (for both men and women) in the many industries that could suit, and even benefit, from it.


It takes time to grow a General you know


The latest wafflery on the subject of gender equality is over the in German armed forces.

The Germany army must introduce quotas to boost the number of female officers, the country’s Defence minister said.

Ursula von der Leyen said she was embarrassed that the army currently only has one female general.

“She is the only one in the history of the Bundeswehr. This is a lousy proportion. So we have to consider quotas with clear timelines,” she said, to Spiegel magazine.

This is simply nonsense. Other than the medical service and army bands women have only been able to serve in the German military since 2001. So, anyone who did join up as an officer would, possibly, be something around and about a Major by now. For it takes time to grow a General.

Yes, of course, this is just politics, a female politician playing to the gallery. But there's an important point behind it.

There's no doubt that women were discriminated against in the past in certain ways. The same is true of, over different timescales, various religions and ethnicities. But it is not possible to look at society and shout that because we do not have members of those formerly discriminated against groups at the top of society, or an organisation, therefore we must still be discriminating against them. Getting to the top, whether of society or an organisation, is something that takes a lifetime. The question is whether the lower levels of society are discriminating against members of such a group: if not then we've done the reforms that are necessary and will simply have to wait to see careers mature.

For example, the gender pay gap in the UK is in favour of women in the very early years of working life, doesn't really exist until the average age of first childbirth. That is radically different from how the situation was when women now in their 50s first entered the workforce. We can't thus measure the gender pay gap of those women in their 50s as a method of working out whether reform is necessary to produce equality for young women. It is the same with the German army's lack of female generals. Given that women have only been able to be officers for 14 years what does anyone expect? A 34 year old General or something?

Another way to put this is that evidence of discrimination against one generation of people is not, and should not be used as, evidence that there is still discrimination against the next.

Sometimes men and women want different things


Sometimes men and women want different things. Their actions in labour markets are one example of this. That's OK, even if it results from socially constructed gender roles, so long as it leads to good lives for both genders. One recent example of where this might be the case comes in a new paper studying the mathematically gifted. (Hat tip to Stephen Hsu).

Two cohorts of intellectually talented 13-year-olds were identified in the 1970s (1972–1974 and 1976–1978) as being in the top 1% of mathematical reasoning ability (1,037 males, 613 females). About four decades later, data on their careers, accomplishments, psychological well-being, families, and life preferences and priorities were collected.

Their accomplishments far exceeded base-rate expectations: Across the two cohorts, 4.1% had earned tenure at a major research university, 2.3% were top executives at “name brand” or Fortune 500 companies, and 2.4% were attorneys at major firms or organizations; participants had published 85 books and 7,572 refereed articles, secured 681 patents, and amassed $358 million in grants.

For both males and females, mathematical precocity early in life predicts later creative contributions and leadership in critical occupational roles. On average, males had incomes much greater than their spouses’, whereas females had incomes slightly lower than their spouses’. Salient sex differences that paralleled the differential career outcomes of the male and female participants were found in lifestyle preferences and priorities and in time allocation.

Men and women differed widely on a large number of metrics. Particularly, men, much more than women wanted high pay, risk taking, merit-based compensation and, work involving physical objects. On the other hand the top three things women valued more than men were, in order: working no more than 40 hours a week, working no more than 50 hours a week, and working no more than 60 hours a week.

It's OK for people to have different preferences, and it's OK for those preferences to differ not just within groups but across groups. That's because satisfying people's job preferences is what gives them general satisfaction and happiness with their job (shock! horror!) Some people may want men and women to be more alike, and that's fine, but we should do this keeping in mind the costs that may impose on both groups.

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Silicon Ovaries


It's only apt that Silicon Valley's new plan to tackle gender imbalance involves cutting-edge technology, a dose of futurism and flash-freezing things in sub-zero temperatures:

Apple and Facebook are offering to freeze eggs for female employees in an effort to attract more women on to their staff, according to US media reports.

Apple, the world’s most valuable brand, said it would offer the perk to US-based staff from January. “We want to empower women at Apple to do the best work of their lives as they care for loved ones and raise their families,” the company said in a statement to ABC News. “We continue to expand our benefits for women, with a new extended maternity leave policy, along with cryopreservation and egg storage as part of our extensive support for infertility treatments.”

Facebook offers up to $20,000 (£13,000) for egg freezing for female employees. The company also offers adoption and surrogacy assistance and “a host of other fertility services for male and female employees”, the company said. (The Guardian)

Even though the schemes are unlikely to have huge take up, it's an idea with a commendable sentiment behind it. The tech world is notorious for its lack of female representation and lingering sexism, and women make up only 30% of Apple and Facebook's workforce. Their support of 'cryopreservation' will benefit both the firms and their employees.

It's damn inconvenient that the years in which women are able to best forge a career are often also those of peak fertility. This not only creates huge opportunity costs when selecting a career/family/income combination, but restricts the pool of talent available to employees. Being able to keep young eggs on ice (and being aided financially to do so) expands the range of work/child  options women have, and makes some of the tradeoffs a little less binary and severe.

 There are a number of ways we try to reduce the 'costs' of raising a child, from statutory maternity pay and free childcare to paternity leave and work crèche schemes. All of these actions shift part of the cost of child-rearing from one figure (usually the mother) to another actor, such as the state, an employer or a partner. It's usually a good thing that these costs are shared out amongst others, but it would be even better if the costs were simply reduced. Something like fertility preservation does that— it uses technology to augment the options available to women and reduces the opportunity cost of pursuing a career— without the need for state intervention, relying on a partner, or for social behaviours and cultural shifts to occur. If a woman voluntarily choses to use her 29-year old self's eggs at the age of 39, everybody wins.

Of course, Apple and Facebook have chosen to foot the bill here, and no firm should be forced to provide such procedures for their employees. But these leading companies clearly think that $20k is a small price to pay to attract and retain top female talent. Certainly, a firm which signals that it is prepared to help employees overcome obstacles to their life choices (amongst many other generous perks) will be a draw for many, and can help women to achieve the success they've always been capable of.

Naturally, there will be those who recoil in horror at the idea of Facebook laying a frosty, calculating hand on their employees' ovaries. Some consider it a neanderthalic and clumsy way of improving women's standing in the workplace, whilst others worry that supporting such technology gives a strong and unpleasant message to women that forging a career whilst raising a family is a faux pas.

Cryopreservation's hardly going to become a mainstream phenomenon any time soon, and for now is only really an option for a small number of women. Were employers to start actively encouraging the treatment or making employment decisions based upon it, then we would need to have a serious conversation about the way in which it was used. Egg freezing's also in no way a panacea. If Silicon Valley really wants to boost the women in its ranks, there's plenty of other things which they can do, like offer more schemes for current parents, and foster a more female-friendly everyday culture.

Ultimately, egg storage is another medical innovation which — like the pill— affords women a greater range of life choices. And far from establishing expectations of what a female employee should do with her womb, Facebook and Apple's support of the proceedure indicates a commitment to heterogeneity and flexibility. It is smart of them to support such a range of lifestyle and career choices, and with luck initiatives like these will help to enrich the lives and bolster the careers of the women who've chosen to work there.

Five intriguing papers I discovered this week

In what might become a recurring feature, I am going to summarise the findings of a few research papers, potentially of interest to ASI blog readers, that were either first released this week, first published this week, or first come upon by me this week.

1. Fernandes, D., Lynch, J. G., and Netemeyer, R. G., "Financial Literacy, Financial Education and Downstream Financial Behaviors" (Jan 2014)

This paper is a large meta-analysis of 168 other papers, which in turn refer to 201 different studies and experiments. They find that at least 99.9% of financial behaviour in life cannot be explained by differences in financial education, or conversely at most 0.1% of the difference in people's financial decision-making and choices is down to education interventions designed to improve their financial literacy. In the words of their abstract: "even large interventions with many hours of instruction have negligible effects on behavior 20 months or more from the time of intervention".

While other correlational studies appear to show some relationship between financial behaviour and educational schemes (i.e. one explaining more than 0.1% of the variance between individuals) they explain that this is only because those typically getting financial education already have various psychological traits associated with careful management of finances. They therefore suggest that big schemes designed to improve lifetime financial decisionmaking are futile and a waste of money; the best we can hope for is "just in time" interventions, perhaps at the point of financial transactions, that are more likely to be taken in and not forgotten.

2. Wang, M-T., Eccles, J. S., and Kenny, S., "Not Lack of Ability but More Choice: Individual and Gender Differences in Choice of Careers in Science, Technology, Engineering, and Mathematics" (May 2013)

In this paper the authors find that a substantial fraction of the male-female "gap" in STEM (Science, Technology, Engineering and Medicine) fields can be explained by the fact that women who are talented at maths tend to also have high verbal skills, skills that mathematically talented men are much more likely to lack. This means they have a wider range of choices available to them, and also possibly identify less closely with maths as part of their personality, and it is this choice not to pursue STEM further that drives the gap, rather than, for example, discrimination in the area or a perceived unfriendly atmosphere.

3. Liu, S., Huang, J. L., and Wang, M., "Effectiveness of Job Search Interventions: A Meta-Analytic Review" (Mar 2014)

Liu, Huang and Wang found, reviewing 47 different experiments testing if schemes "teaching job search skills, improving self-presentation, boosting self-efficacy, encouraging proactivity, promoting goal setting, and enlisting social support" could boost the unemployed's chances of getting a job. In fact, on average those in the treatment groups—i.e. those actually subject to the intervention, and not in the control group—were 2.67 times more likely to get a job. Since the studies all used randomness of quasi-randomness to assign treatment, this suggests, they say, that schemes that develop skills and self-motivation can be effective. However, the schemes were more likely to help the young than the old, the short-term unemployed than the long-term unemployed, and job-seekers with special needs, as compared to the population at large.

4. Karwowski, M., and Lebuda, I., "Digit ratio predicts eminence of Polish actor" (Jul 2014)

In a slightly surprising study, the two authors looked at 98 Polish actors, both male and female, and compared the ratio between their second and fourth digits on their hand (a measure of prenatal testosterone exposure) and their productivity and fame. For both men and women, even controlling for age, a higher ratio predicted more pre-eminence.

5. Aisen, A., and Veiga, F. J., "How Does Political Instability Affect Economic Growth?" (Jan 2011)

In a classic example where economists do extensive research to tell us what we already know, this IMF paper from 2011 shows us how bad political instability is for economic growth. Actually, the paper is a great one because it allows us to estimate the size of the impact of different political elements on instability and then the size of instability's own impact on economic aggregates.

Their findings are highly interesting: whereas primary school enrolment has a pitifully small impact on economic growth, and the impact of investment, economic freedom and the security of property rights comes out quite small, violence, political instability and cabinet changes have substantial negative effects, as does, surprisingly, population growth. And while the most productive regions in Europe are the most ethnically diverse, in this study ethnic homogeneity is very strongly associated with growth. Of course, the conclusions of the paper—that countries should address the root causes of political instability—are much easier said than done!