More about menstruation and the gender earnings gap

After my recent post, Does menstruation explain the gender pay gap?, some more research on a similar theme. Andrea Ichino from the European University Institute and Enrico Moretti at the University  of California, Berkeley have a new NBER working paper, Biological Gender Differences, Absenteeism and the Earning Gap, which argues that women's higher rate of absenteeism due to menstruation reduces their earnings and accounts for almost 12% of the gender earnings gap:

In most Western countries illness-related absenteeism is higher among female workers than among male workers. Using the personnel dataset of a large Italian bank, we show that the probability of an absence due to illness increases for females, relative to males, approximately 28 days after a previous illness. This difference disappears for workers age 45 or older. We interpret this as evidence that the menstrual cycle raises female absenteeism. Absences with a 28-day cycle explain a significant fraction of the male-female absenteeism gap.

To investigate the effect of absenteeism on earnings, we use a simple signaling model in which employers cannot directly observe workers' productivity, and therefore use observable characteristics – including absenteeism – to set wages. Since men are absent from work because of health and shirking reasons, while women face an additional exogenous source of health shocks due to menstruation, the signal extraction based on absenteeism is more informative about shirking for males than for females. Consistent with the predictions of the model, we find that the relationship between earnings and absenteeism is more negative for males than for females. Furthermore, this difference declines with seniority, as employers learn more about their workers' true productivity. Finally, we calculate the earnings cost for women associated with menstruation. We find that higher absenteeism induced by the 28-day cycle explains 11.8 percent of the earnings gender differential.

For those without access to NBER publications, you can find a version here (PDF).

It's an interesting thesis and a careful piece of analysis. But clearly, like the earlier paper I cited, it's only one part of the gender earnings gap picture. I am not a biological reductionist, and very much doubt that menstruation can explain most of the gender gap. On my somewhat cursory reading of the quite vast literature, the two main drivers of the gender divide in most countries are:

• The effect of time off work from maternity leave and career breaks, with the gender gap being greater for women who take longer off work, or who have more than one child and hence multiple breaks.
• The effect of mothers not returning to the same employer and same job (in many cases, due to switching from full-time to part-time employment)  - in many countries, effectively trading away career prospects and training for greater working time convenience and flexibility (though not, apparently, in the Netherlands).

These two factors are likely to be be more important than absenteeism or bargaining/risk aversion.

Hat tip: Adam O'Neill at The Lowest Deep

UPDATE: Tyler Cowen at Marginal Revolution links to this post, and in a subsequent addendum he also links to the paper by Yan Chen, et al, Why Can't a Woman Bid More Like a Man? (PDF), which was the subject of my first post on this topic. For my thoughts on it, please refer to that post.

Comments

[Robert]

Has this "gender gap" been corrected for qualifications and experience? Expecting a woman with fewer qualifications and less experience to earn as much as a man with more is absurd. It could be that a woman with equal ability, education and experience to a man actually earns more, which is certainly the case with blacks and whites.

[neha]

I would assume that women are more likely to take care of children who get sick even if they have male partners. Which might explain why they take more "offs". Your company is likely to let you take leave if you - yourself are sick, as opposed to your child having taken ill.

Maybe if more men start contributing proactively towards child rearing.. etc. etc.

[AS]

Robert, the gender gap generally refers to the difference between the earnings of men and women that *cannot* be explained by differing qualifications, experience, etc. Controlling for these variables reduces the "naive" wage gap significantly, but never entirely -- equally qualified and experienced women earn less than their male counterparts. (Caveat: there is always the possibility of a missing variable lurking in the gap's shadow.)

Similar studies have been done across ethnicity/race instead of gender, and show that when you plug in relevant variables like years in labor force and highest degree completed, whites/caucasians have the highest expected earnings. Equally qualified blacks earn less, statistically. In the paper I found, the only exception was Japanese, who earned more than others, measured characteristics the same.