New Economist

Why should men care about women's rights?

UCLA's Matthias Doepkey and Stanford's Michèle Tertilt ask a good question about women's rights and development: Women’s Liberation: What Was in It for Men? (PDF). Here is their answer:

Women’s rights are closely related to economic development. This is true both across countries, where women have most rights in the richest countries, and in time series data: women have slowly improved their legal position in parallel with fast improvements in the standard of living. In most cases, the initial extension of rights to women amounted to a voluntary renouncement of power by men.

In this paper, we investigate the economic incentives for men to share power with women. We show that men may want to voluntarily relinquish some of their power once technological change increases the importance of human capital. The reason is that men face a tradeoff between how they would ideally like to treat their own wives and how they want other women to be treated. While men might want little rights for their own wives, they may prefer their daughters to have a better bargaining position with future husbands. In addition, a wife’s education matters for producing high-quality children. A husband prefers his children to find high-quality mates, and therefore stands to gain from increasing the power of his children’s mothers-in-law.

Men have wives - but they also have daughters. Indeed, seeing the world through a daughters' eyes can make even the most macho or chauvinistic man reconsider their attitudes on gender equality.

For those near Yale, Michèle Tertilt is presenting the paper there on Monday 15 October to their Development Workshop

India: caste out

Latest story from India is about rent-seeking with a difference - a group seeking to have their social status lowered in order to benefit from government affirmative action quotas. Amelia Gentleman reports in today's International Herald Tribune on the the Gujjar community, who are Fighting their way to the bottom in India

NEW DELHI: A fight for the right to be downwardly mobile exploded this week in north India, as a powerful community of Indian shepherds asserted that the best way to rise up in modern society was to take a step down in the regimented class hierarchy.

Tension over the still-rigid caste classifications, which underpin the Indian social system, spilled over into riots across the state of Rajasthan, with at least 23 people killed during clashes with the police. By Friday evening, protests had spread to the outskirts of the capital, New Delhi.

This was not the usual show of anger at the ever-prevalent discrimination faced by members of lower-caste groups. Instead, it stemmed from controversy over a demand from the Gujjar community of farmers and shepherds to have their low caste status officially downgraded, relegating them to the bottom classification in the caste ladder.

If Gujjars were to be shunted into the Scheduled Caste category, a classification that includes Dalits (once known as untouchables) and tribal communities, they would qualify for greater privileges under India's affirmative action program, which was designed to lift up those groups that for centuries were viewed as "pollutants," ostracized by mainstream society and prevented from accumulating wealth.

Quotas of university places and lucrative government positions are reserved for members of the Scheduled Castes under the system that was created when India became independent 60 years ago. Although the Gujjar caste is also eligible for some privileges because of its position in the second-from-bottom grouping - known in bureaucratic lexicon as Other Backward Classes - its leaders point out that members would enjoy much better preferential treatment if it were demoted to the lowest rung.

Sachin Pilot, the Congress Party member of Parliament for the region where six people were killed by police gunfire Tuesday and a member of the Gujjar caste, said as many as 70,000 protesters were still blocking the road out of Jaipur.

"Most people don't realize that India's new economic prosperity is not shared by the vast majority," he said in a telephone interview. "The Gujjars feel they have been very deprived. Access to quotas would give the community a sense of hope."

You can't train for diversity

Time reporter Lisa Takeuchi Cullen explains why Employee Diversity Training Doesn't Work

Some decades ago, the powers that be declared that employee diversity was a good thing, as desirable as double-digit profit margins. It's proving just as difficult to achieve. Companies try all sorts of things to attract and promote minorities and women. They hire organizational psychologists. They staff booths at diversity fairs. They host dim-sum brunches and salsa nights. The most popular--and expensive--approach is diversity training, or workshops to teach executives to embrace the benefits of a diverse staff. Too bad it doesn't work.

A groundbreaking new study by three sociologists.  ...Their analysis found no real change in the number of women and minority managers after companies began diversity training. That's right - none. Networking didn't do much, either. Mentorships did. Among the least common tactics, one - assigning a diversity point person or task force - has the best record of success. "Companies have spent millions of dollars a year on these programs without actually knowing, Are these efforts worth it?" Dobbin says. "In the case of diversity training, the answer is no."

The law is one reason that employers favor diversity training. In the wake of whopping settlements in race-discrimination suits against large companies, including Texaco and Coca-Cola, over the past decade, employers believe that having a program in place can show a judge that they are sincerely fighting prejudice. But this too is a myth, says Dobbin: "I don't know of a single case where courts gave credit for diversity training."

Social psychologists have many theories to explain why diversity training doesn't work as intended. Studies show that any training generates a backlash and that mandatory diversity training in particular may even activate a bias. Researchers also see evidence of "irresistible stereotypes," or biases so deeply ingrained that they simply can't be taught away in a one-day workshop.

The piece is based on a recent American Sociological Review  article by Alexandra Kalev of UC Berkeley, Frank Dobbin of Harvard, and Erin Kelly of the University of Minnesota: Best Practices or Best Guesses? Assessing the Efficacy of Corporate Affirmative Action and Diversity Policies (PDF). This is a good example of policy-relevant empirical analysis. Here is the abstract:

Employers have experimented with three broad approaches to promoting diversity. Some programs are designed to establish organizational responsibility for diversity, others to moderate managerial bias through training and feedback, and still others to reduce the social isolation of women and minority workers. These approaches find support in academic theories of how organizations achieve goals, how stereotyping shapes hiring and promotion, and how networks influence careers.

This is the first systematic analysis of their efficacy. The analyses rely on federal data describing the workforces of 708 private sector establishments from 1971 to 2002, coupled with survey data on their employment practices. Efforts to moderate managerial bias through diversity training and diversity evaluations are least effective at increasing the share of white women, black women, and black men in management. Efforts to attack social isolation through mentoring and networking show modest effects. Efforts to establish responsibility for diversity lead to the broadest increases in managerial diversity.

Moreover, organizations that establish responsibility see better effects from diversity training and evaluations, networking, and mentoring. Employers subject to federal affirmative action edicts, who typically assign responsibility for compliance to a manager, also see stronger effects from some programs. This work lays the foundation for an institutional theory of the remediation of workplace inequality.

So organisational responsibilty and accountability make a difference; diversity training and evaluation don't. One wonders why the EEOC didn't examine these issues years ago...

"men and women do the same amount of total work"

Do women work longer hours, paid and unpaid, than men? Mpost people seem to think so, but as Andrew Leigh points out, it ain't necessarily so. A new IZA discussion paper/NBER working paper by Michael Burda, Dan Hamermesh, and Philippe Weil, Total Work, Gender and Social Norms (PDF), finds that in most OECD countries "there is no difference - men and women do the same amount of total work." Here is the abstract:

Using time-diary data from 25 countries, we demonstrate that there is a negative relationship between real GDP per capita and the female-male difference in total work time per day -- the sum of work for pay and work at home. In rich northern countries on four continents, including the United States, there is no difference -- men and women do the same amount of total work. This latter fact has been presented before by several sociologists for a few rich countries; but our survey results show that labor economists, macroeconomists, the general public and sociologists are unaware of it and instead believe that women perform more total work.

The facts do not arise from gender differences in the price of time (as measured by market wages), as women's total work is further below men's where their relative wages are lower. Additional tests using U.S. and German data show that they do not arise from differences in marital bargaining, as gender equality is not associated with marital status; nor do they stem from family norms, since most of the variance in the gender total work difference is due to within-couple differences.

We offer a theory of social norms to explain the facts. The social-norm explanation is better able to account for within-education group and within-region gender differences in total work being smaller than inter-group differences. It is consistent with evidence using the World Values Surveys that female total work is relatively greater than men's where both men and women believe that scarce jobs should be offered to men first.

Why women don't ask

In a fascinating book published four years ago, Women Don't Ask, Linda Babcock and Sara Laschever found that whether they want higher salaries or more help at home, women often found it hard to ask. But why don't they ask? Harvard's Hannah Riley Bowles and Carnegie Mellon's Linda Babcock and Lei Lai have examined this question in a series of experiments. Their paper, Social Incentives for Gender Differences in the Propensity to Initiate Negotiations: Sometimes It Does Hurt to Ask (PDF), finds that women may face social, such as being perceived as 'demanding', or may be penalised for initiating negotiations:

Four experiments show that gender differences in the propensity to initiate negotiations may be explained by differential treatment of men and women when they attempt to negotiate. In Experiments 1 and 2, participants evaluated written accounts of candidates who did or did not initiate negotiations for higher compensation. Evaluators penalized female candidates more than male candidates for initiating negotiations.

In Experiment 3, participants evaluated videotapes of candidates who accepted compensation offers or initiated negotiations. Male evaluators penalized female candidates more than male candidates for initiating negotiations; female evaluators penalized all candidates for initiating negotiations.

Perceptions of niceness and demandingness explained resistance to female negotiators. In Experiment 4, participants adopted the candidate’s perspective and assessed whether to initiate negotiations in same scenario used in Experiment 3. With male evaluators, women were less inclined than men to negotiate, and nervousness explained this effect. There was no gender difference when evaluator was female.

As the authors conclude, "this research suggests that gender differences in the initiation of negotiations cannot be resolved simply by encouraging women to speak up more." Moreover, research which focuses primarily on the economic outcomes of negotiation may overlook the fact that sometimes "the social costs of engaging in certain negotiating behaviors may not outweigh the economic benefits."

It's certainly food for thought - but with one very important caveat. Like most other experimental studies, the authors have based their conclusions on an unrepresentative sample - college students.

The participants were 119 North American university students (66 men, 53 women) recruited from various points on a university campus (e.g., flyers, dining halls) to participate in a Hiring Decision Study.

I very much doubt that the behaviour and attitudes of a bunch of students whose median age was 20 would accurately replicate those of experienced supervisors or HR managers facing a recruitment, promotion or renumeration decision. I wish social scientists would make greater efforts to find test subjects who are representative of the hypothesis they are testing, rather than go for the lazy (and cheap) approach of walking down the corridor and offering $5 to whoever they can get.

How should immigrants be integrated into the labour market?

The OECD has published four new Social, Employment and Migration Working Papers which provide accounts of how Germany, Sweden, Australia and Denmark have have handled their post-war migrant intakes. Each have different histories and policy responses, and while none could be considered an unequivocal success, Australia seems to have done better than most. The Danish government has actively promoted integration but employers appear to treat even the children of OECD immigrants badly. Sweden is still stuck with the legacy of the scarring effect the 1980s economic crisis, while Germany faces high levels of inactivity amongst Turkish women and a 'second generation' problem. Here are long excerpts from the executive summaries:

No. 47. The Labour Market Integration of Immigrants in Germany (PDF) by Thomas Liebig

Germany is currently in the process of a major restructuring of its complex integration framework. Under the new Immigration Act which came into force on 1 January 2005, there is a uniform introduction programme for all permanent immigrants.

As in the past, integration services focus largely on language training. There is little evaluation with respect to the effectiveness of this kind of training and it is generally not linked to labour market needs. Indeed, the scarce empirical evidence suggests that language training in Germany may not be very effective as a means of labour market integration. In addition to the regular integration services, there is a multitude of innovative projects. However, these are often locally-based and time-limited, and seldom designed in a way that would enable proper evaluation.

With respect to employment and unemployment rates, and particularly given their low educational attainment and the current economic situation, the labour market integration of immigrant men is relatively favourable in international comparison. However, immigrant women, and particularly those of Turkish origin, have very low employment rates. This is partly an outcome of policies which limited the labour market access of spouses. Most of these legal obstacles have been removed under the new Immigration Act.

The situation of the so-called “second generation” is of concern, as they have very low educational outcomes. This hampers their access to vocational training, which appears to have an even stronger impact on their employment prospects than on those of natives. The low educational attainment of the second generation seems to be at least partly attributable to structural features in the German education system, such as the early streaming which puts migrants’ children in a lower track. Especially problematic is the relatively late starting age for kindergarten and the prevalence of half-day education in kindergarten and school, which limits exposure to the German language at a crucial age. Immigrants’ access to self-employment is hampered by legal obstacles and a lack of information and subsequent access to financial credits.

Despite positive experiences with temporary employment as a labour market integration tool for immigrants in other OECD countries, immigrants are not a focus group of the Federal temporary employment programme.

No. 48. The Integration of Immigrants into the Labour Market: the Case of Sweden (PDF) by Georges Lemaître

The past fifteen years have seen a higher share of humanitarian migration in Sweden than in the past. This is a form of migration for which labour market integration appears to be slower than for other forms of migration in all countries. At the same time there has been a growing diversification of migration away from “Western” countries to those with a greater cultural distance.

With 1985 came the introduction of social assistance for refugees for an eighteen-month introductory period, the transfer of responsibility for integration away from the Labour Market Board and the refugee dispersal policy in which refugees were assigned to municipalities throughout Sweden to relieve the pressure on the large agglomerations, with local economic conditions not always being taken into account. The dispersal policy had a negative effect on immigrant outcomes, particularly with respect to those arriving during the economic crisis, for whom the effects seem in many cases to be persistent.

With the severe economic crisis of the 1990s, asylum seeking in Sweden continued and those asylum seekers that were recognised and granted a residence permit were met with a labour market situation that was highly unfavourable and where considerable numbers of native-born Swedes with domestic formal qualifications and work experience were also looking for work. At the same time, the crisis struck immigrants already present and employed disproportionately. The re-integration of immigrants into the ranks of the employed was rendered all the more difficult by the fact that some two-thirds of jobs, in the Swedish labour market appear to be filled through informal methods.

The situation of immigrants has improved significantly since the trough of the economic downturn, especially for new arrivals. The relatively favourable impact on employment of a minimum amount of language training and of vocational training for this group and the relatively low take-up of these suggest that there is room for improvement with regard to labour market outcomes in the early years of residence, which can be expected to persist with continued residence.

The situation for immigrants having arrived since the mid-eighties and having suffered the brunt of the economic crisis of the nineties remains unfavourable. It is difficult to see how the continuing employment problems of this group can be turned around without a strong economic expansion, given the re-enforcing nature of further non-employment on both inactivity and employer perceptions. If targeted measures are politically infeasible, then general measures that provide especially favourable results for immigrants need to be encouraged and expanded.

...What employers recognise and reward seems to be Swedish work experience and successful integration tends to be associated with early contact with the labour market. Results seem to suggest that the benefits of early employment experience on later employment are much stronger than those of Swedish vocational education. Improving the efficiency of language instruction so as not to overly prolong labour market entry and ensuring that proficiency requirements reflect actual occupational needs are matters of some importance.

No. 49. The Labour Market Integration of Immigrants in Australia (PDF) by Thomas Liebig

Overall, the labour market integration of immigrant men in Australia can be considered to be relatively favourable in international comparison. This is partly attributable to selection policy and the prevalence of the English language in many parts of the world. Even with similar socio-demographic characteristics, skilled migrants tend to perform better than other migrant groups. In contrast to the positive outcomes for immigrant men, the labour force participation of immigrant women is not high in international comparison.

More on the US gender gap

The New York Times piece I posted about earlier today implies that the gender pay gap has stopped narrowing in the United States. In aggregate terms this is not the case - as the accompanying picture shows. The unadjusted median hourly pay gap continued to close through the late 1980s and early 1990s, reaching a low of 20.2% in 2003 compared with 25.0% in 1993. (Although the pay gap did widen a little in 2004 and 2005, to 20.4% and 20.6% respectively).

But when one adjusts the raw numbers for changing employee characteristics, especially education, the picture looks more bleak - suggesting little change in the gender pay gap since the early 1990s.

This chart comes from a very useful website on the End of the Gender Revolution?, maintained by David A. Cotter (Union College), Joan M. Hermsen (University of Missouri) and Reeve Vanneman (University of Maryland). The site also makes available most of the time series data used for the charts in Excel spreadsheets, updated to 2005. Recommended.

The US gender pay gap - slow progress

A long piece by the New York Times' David Leonhardt explains why in the United States the Gender Pay Gap, Once Narrowing, Is Stuck in Place. The accompanying graphic is worth clicking on.

Throughout the 1980s and early ’90s, women of all economic levels — poor, middle class and rich — were steadily gaining ground on their male counterparts in the work force. By the mid-’90s, women earned more than 75 cents for every dollar in hourly pay that men did, up from 65 cents just 15 years earlier.

Largely without notice, however, one big group of women has stopped making progress: those with a four-year college degree. The gap between their pay and the pay of male college graduates has actually widened slightly since the mid-’90s.

For women without a college education, the pay gap with men has narrowed only slightly over the same span.

These trends suggest that all the recent high-profile achievements — the first female secretary of state, the first female lead anchor of a nightly newscast, the first female president of Princeton, and, next month, the first female speaker of the House — do not reflect what is happening to most women, researchers say.

A decade ago, it was possible to imagine that men and women with similar qualifications might one day soon be making nearly identical salaries. Today, that is far harder to envision.

“Nothing happened to the pay gap from the mid-1950s to the late ’70s,” said Francine D. Blau, an economist at Cornell and a leading researcher of gender and pay. “Then the ’80s stood out as a period of sharp increases in women’s pay. And it’s much less impressive after that.”

Last year, college-educated women between 36 and 45 years old, for example, earned 74.7 cents in hourly pay for every dollar that men in the same group did, according to Labor Department data analyzed by the Economic Policy Institute. A decade earlier, the women earned 75.7 cents.

The reasons for the stagnation are complicated and appear to include both discrimination and women’s own choices. The number of women staying home with young children has risen recently, according to the Labor Department; the increase has been sharpest among highly educated mothers, who might otherwise be earning high salaries. The pace at which women are flowing into highly paid fields also appears to have slowed.

Two sides of the same coin?

Two of the stylised facts of the US labour market (and many other OECD countries) are a narrowing of the gender earnings gap, and widening wage inequality. Are these two trends connected? Marigee Bacolod from University of California-Irvine and Bernardo S. Blum at the University of Toronto argue that they are, in a recent paper, Sides of the Same Coin: U.S. “Residual” Inequality and the Gender Gap (PDF):

In this paper, we show that the two major developments experienced by the US labor market - rising inequality and narrowing of the male-female wage gap - can be explained by a common source: the increase in price of cognitive skills and the decrease in price of motor skills. We obtain the implicit price of a multidimensional vector of skills by combining a hedonic price framework with data on the skill requirements of jobs from the Dictionary of Occupational Titles and workers’ wages from the CPS.

We find that in the 1968-1990 period the returns to cognitive skills increase four-fold and the returns to motor skills decline by 30%. Given that the top of the wage distribution of college and high school graduates is relatively well endowed with cognitive skills, these changes in skill prices explain up to 40% of the rise in inequality among college graduates and about 20% among high school graduates. In a similar way, because women were in occupations intensive in cognitive skills while men were in motor-intensive occupations, these skill-price changes explain over 80% of the observed narrowing of the male-female wage gap.

It's an interesting thesis. I'd like to see if this skills-based analysis holds up in other OECD countries too.

It's Not Even Zero

by Mark Thoma

Andrew Leigh with new research on the health effects of inequality. There's no evidence that being rich reduces average mortality, or that being poor increases it:

Does Inequality Kill You?, by Andrew Leigh: It is often argued that inequality is bad for your health. Indeed, in Imagining Australia, my coauthors and I made precisely this argument, saying that one of the reasons that policymakers should be worried about inequality is because it makes you sicker.

In theory, there are several ways this might happen. ... Unfortunately, the empirical evidence is less persuasive than the theoretical evidence. In the most recent contribution to the literature, Harvard’s Christopher Jencks and I ... find precisely no relationship.

It’s important to point out that not only are our coefficients close to zero, but our standard errors are small enough that we can reject even modest detrimental impacts of inequality on health. As one participant at the NBER meetings ... put it, “it’s not just zero, it’s very zero”.

If I were coauthoring Imagining Australia today, I’d omit the claim that inequality makes you sick. Of course, this doesn’t mean we shouldn’t care about inequality. Probably the best reason to worry about inequality is also the simplest: a dollar brings more happiness to a poor person than a rich person.

Our paper is entitled Inequality and Mortality: Long-Run Evidence from a Panel of Countries. It’ll be out soon in the Journal of Health Economics.