Decoding Goldin’s Nobel for Pakistan

By Afshan Subohi
Published in DAWN on October 16, 2023

The significance of acknowledging a leading female labour economist went unnoticed in a turbulent world preoccupied with intensifying conflict in the Middle East, which imperils the hard-won gains in peace, development and human dignity achieved over centuries.

Last week, the Royal Swedish Academy of Sciences awarded the 2023 Riksbank Prize in Economics in honour of Alfred Nobel to Prof Claudia Goldin from Harvard University, USA. She was honoured for her unwavering dedication to advancing the understanding of market outcomes related to women’s workforce participation and the historical gender disparities in earnings.

Her research delved into the origin of women’s changing roles in the labour market and the primary factors contributing to persistent gender-based income gaps.

Women’s underrepresentation in the global labour market and lower earnings than men have persisted and marked as a significant issue. The third woman economist and the first ever to win Nobel solo, Claudia Goldin’s extensive analysis of over two centuries of US data revealed shifting trends in gender disparities.

Her research suggests that income disparity between genders is primarily due to decisions made early in a girl child’s life by her parents

She found that women’s labour force participation followed a U-shaped curve, declining during the transition from agrarian to industrial phase, then increasing with the growth of the services sector in the early 20th century, shaped by changing norms and transforming structures.

She noted how women’s education levels, especially after the introduction of contraceptives, evolved significantly, but the income gaps between genders persisted. The income disparity, according to Prof Goldin, is primarily due to decisions made early in a girl child’s life under the influence of parents. Notably, the gender earning gap now mainly arises with the birth of the first child rather than a difference in education and career choices between men and women.

Prof Rashid Amjad, former VC Pakistan Institute of Development Economics, who is currently associated with the Lahore School of Economics, commented on the significance of Claudia Goldin’s work in the context of gender disparity in Pakistan when discussing the merit of her Nobel prize.

“In Central Punjab, the daily wage for male farm labour is Rs1,000 while for female it is Rs600. A study from five years ago reported that the average monthly salary for male workers in Pakistan was Rs18,708, compared to Rs12,877 for females. This wage gap is believed to have grown significantly over the past two decades. Why?

In pursuit of answers to this glaring inequality violating the International Labour Organisation’s (ILO) fundamental rights at work and the principle of ‘equal remuneration for men and women for work of equal value’, the Nobel Committee rightly recognised Prof Goldin’s efforts.

“This stark injustice of low female participation and unfair compensation has received minimal attention from policymakers, even though Pakistan is a signatory to the ILO’s Equal Remuneration Convention. Prof Goldin’s work illustrates why gender disparity in the labour market must be examined through a historical lens to better understand and formulate remedial action plans.

“While Pakistan boasts several prominent gender specialists in the labour market who have conducted valuable research, there is a need to delve deeper into it from a historical and institutional perspective as the Nobel Laureate has done. Only then can we devise effective policies to unleash the potential of Pakistan’s ‘overworked and underpaid female resources’ and ensure fair compensation. Such intervention is crucial for breaking the cycle of crisis and fostering sustainable recovery sustainable.”

Farha Said, a development economist focusing on gender, expressed excitement over this year’s award. “Prof Goldin was a frontrunner for the 2023 Nobel Prize for Economics, and many of us had hoped for this recognition to come sooner. This award holds immense importance for two key reasons.

“One, prior to Goldin’s work, labour economists largely overlooked women. Working women make choices that complicate economic modelling. Claudia Goldin’s meticulous and investigative work demystified these choices, documenting why women work, why they take breaks, and the disadvantages they encounter, which explain the persistent gender gaps in the labour market.

“Her pioneering research has contributed to the development of policies that can expand women’s choices in education and the labour market. It has paved the way for others to understand historical trends and design effective policies in their respective contexts.

“Two, for far too long, we’ve had to push against the notion that gender economics is somehow separate from mainstream economics. Female economists, in particular, have faced criticism that studying the constraints faced by women is inherently biased.

“This award serves as validation for the work many economists do on exploring gender gaps in education and the labour market. I, along with many of my colleagues, am genuinely thrilled about the recognition of this line of work.”

Speaking off the record, a UK-based Pakistani economist expressed her happiness over the Nobel, aligning with others opposed to gender discrimination.

However, a female economist from Islamabad had a contrary view, finding the award recipient overrated. “l doesn’t believe her work is Noble-worthy. For instance, if you chart female labour force participation by age, it forms a U-shape due to women entering the labour force, leaving for childbearing and re-entering. Furthermore, her research lacks universality and is specific to the West. Her hypothesis doesn’t hold in Pakistan, where women’s career paths follow a zigzagging flat line.”

Ms Farha contested this observation, stating: “To be fair, Goldin never claimed universality in the trends she worked. While there are outliers, female labour force participation in India and Pakistan is significantly lower than in other countries. In Nepal, Brazil and China, it’s much higher, influenced by norms and the quality of informal work in most cases.

“Even in India, the sector where female participation has steadily increased is salaried and formal, in line with Goldin’s work. It is equally true that women labour force participation remains low in these countries in ‘greedy work’ which demands long and inflexible work hours.”

She continued, “These trends have nuances, which labour economists, including Goldin, acknowledge. I agree that Prof Goldin’s work does not fully address the strong influence of norms in South Asia. However, this is where South Asian economists can contribute. We know that increasing female participation can significantly boost Pakistan’s GDP, but there have been no meaningful efforts to improve policies beyond conferences.

“Now, at least, we can emphasise the value of women’s labour and argue that nuances and contexts are crucial without the fear of being dismissed as feminine concerns.”

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