Gender pay gap linked to workplace flexibility

The White House, the Department of Labor, and the Center for American Progress are hosting a Summit on Working Families next week to explore important issues such as equal pay and workplace flexibility. According to recent research by Harvard economist Claudia Goldin, these two issues are intimately related. Moreover, they hold implications for the broader economy.

Goldin published a paper earlier this year in the American Economic Review titled “A Grand Gender Convergence: Its Last Chapter.” She calls the converging roles of men and women “among the grandest advances in society and the economy in the last century.” Goldin argues that what is needed to complete this convergence is not necessarily government mandates or a changing role of men in the household, “(although that wouldn’t hurt),” but instead policies to foster workplace flexibility.

Goldin examines the gender wage gap in a number of different professions over the years and finds that the difference in earnings by gender can be explained by differences in the degree to which jobs allow for flexibility in the hours worked (rather than penalize an employee’s need for flexible hours over the course of a career). In professions hiring people with MBA or JD degrees, for example, Goldin finds that the gender pay gap significantly increases over time. In the corporate and legal sectors, there is a reward to working not only long hours but also to working those hours continuously, which is critical to becoming a top manager or partner but is at odds with flexible scheduling over the course of a career. Indeed, the increase in the gender pay gap in these professions appears to coincide with the arrival of children, which disproportionately affects women.

In contrast, Goldin finds that some professions in the health sector do not penalize taking time off, and in those professions the gender pay gap does not increase significantly over time. For pharmacists, for example, the difference in pay between men and women does not increase significantly over the course of their career, even after they have children. Overall, Goldin concludes that occupational pay differences are “largely due to the value placed on the hours and job continuity of workers.”

Policies to promote workplace flexibility could include policies which aim to improve the availability of quality childcare  and provide more options that may prevent women from temporarily leaving the workforce, or paid family leave, which would also reduce turnover. Cities such as Boston are already seeking to close the gender pay gap, including through policies to encourage workplace flexibility.

As Betsey Stevenson of the Council of Economic Advisers notes: “Boston recognizes that this isn’t just an issue of fairness and isn’t just an issue of equity as a moral value… this is about competitiveness and having competitive advantage.” Workplace flexibility policies may not only promote gender equity but also increase attachment to the workforce, which could boost productivity and long-term growth.