Wednesday, April 9, 2014

Botched economics of gender in the WSJ

Mark Perry and Andrew Biggs have a really unfortunate op-ed in the Wall Street Journal yesterday perpetuating the idea that the gender pay gap is a "myth" (I know that's the title they were probably given but the column itself makes much the same point).

Why would they claim that? Because surprise, surprise the conditional difference in means is smaller than the unconditional difference in means!

I sent this letter to the editor in. It has not been published at this point:
"Mark Perry and Andrew Biggs (April 7th, 2014, "The '77 Cents on the Dollar' Myth About Women's Pay") seem to confuse our ability to attribute the gender pay gap to various factors with the idea that the gap itself is a "myth". Far from demon...strating that the gap is "economically illogical", by highlighting the various determinants of pay disparities Perry and Biggs are actually confirming the existence of the gap and presenting evidence on where it originates.

Economists have been studying female labor market participation and performance for decades. This research does not stop at the question of pay disparities. We know, for example, that many occupations are highly segregated by gender, and that large gender disparities exist in the amount of time dedicated to household work. Young women may be nominally free to major in whatever they choose, as Perry and Biggs suggest, but these choices are heavily conditioned by earlier experiences in the home and in primary and secondary school.

All of these disparities are closely related to each other and to the pay gap, and they pose a real problem for those of us that value gender equity. Dismissing the gender pay disparity because it is deeply embedded with other disparities does not clarify the issue at all; it confuses the issue.

Daniel Kuehn
Doctoral student, American University Department of Economics
Specializing in labor economics and gender economics"
Mark Perry's next column: The black unemployment rate is a myth because if you control for unequal education, terrible treatment by the justice system, and differences in a family structure a whole lot of it seems to go away! Also must not be caused by discrimination.

If anyone is interested in studying the economics of gender and the family, you should look into American University. It was the first U.S. university to have a field specialization in gender economics, it offers courses in both gender macro and micro, and a lot of the faculty are working on these issues.


  1. Daniel P. Kuehn: While I understand your passion for American University...are there any other places that offer excellent research programmes for gender economics that you would recommend?

  2. Mr. Kuehn,

    Though it's not stated as specifically as it should be, the myth that I would argue that most economists are referring to is not that there is a difference in pay or even that the difference is not due to sexism but the myth that the reason for the difference is due to discrimination on the part of the employer. This is what they are trying to expose as a myth because the policies being recommended by the politicians to erase the gender pay gap are all focused on allowing more discrimination lawsuits to be brought against employers or more collection of wage data from employers.

    But more to the point I believe you are trying to make, Steven Horwitz had a good blog posting today in which he tries to explain in more detail what he and other economists are attempting to debunk and how that should be applied to the broader discussion of sexism elsewhere in the economy.

    He starts by pointing out,

    "One point of confusion is not understanding that the issue, for economists, is about discrimination in labor markets and wages. When we say that wage differentials between men and women are mostly not due to discrimination, what we are saying is the following: men and women with identical labor market characteristics and preferences about jobs will get paid nearly the same. Our concern is whether wages are related to those variables rather than the employer’s like or dislike of one group or another, regardless of their job characteristics etc.. Put differently, economists tentatively conjecture that discrimination exists if any part of the pay differential between men and women cannot be explained by human capital and job preferences.

    "Notice that this says nothing about whether there is sexism elsewhere in the economy. All that is says is that we only presume that employers are discriminating when they don’t pay people the same who have otherwise the same job market characteristics (aside from gender)."

    And ends with,

    "So arguing that labor market discrimination plays a very small role in explaining the gender pay gap does not mean that sexism has nothing to do with it. Sexism matters, but far more in the ways human capital is acquired and preferences are formed than in the wage decisions made by employers."

    1. The op-ed is clearly broader than that, though, and no I don't think it's a view shared by most economists (I don't think that's something most people think). I don't see what the problem is with discrimination lawsuits. It's part of the problem and it's one of the few areas where the government could do something. Much of the rest of the gap is due to other social forces, and it would be odd to have the government tackle that.

      Steve's claim, at least what you've quoted here, is a little confused I think, but fine. I think it's confusing for him to distinguish between sexism (in the last paragraph you quote) and discrimination in the first. I'm not exactly sure what the difference is, but there's certainly discrimination in school, in entering different occupations, etc. as well. Low pay is not independent of occupational sorting. Why do you think women are sorted into low paying jobs? There are lots of reasons of course, but one of the reasons is because that results in lower pay.

      So Steve's is much better and quite different from the op-ed, but I'd still put it differently.

      And I would not necessarily represent Steve or Mark Perry's rendition as "the economist's" version.

    2. When I said "most economists" I meant most of the economists that write articles refuting the claim that the pay gap is the result of discrimination. Mr. Horwitz's article was the first I've seen that specifically spells out what myth he, and I think others, are trying to debunk. Even in their WSJ op-ed, Perry and Biggs acknowledge that a pay gap exists as the ending paragraph starts with, "The administration's claims regarding the gender pay gap are faulty..." If their op-ed was meant to imply that no pay gap exists they would have instead stated, "The administration's claims regarding a gender pay gap are faulty..."

      As for Mr. Horwitz's use of the terms discrimination and sexism, he's using discrimination when referring to whether employers are choosing to discrimination against a woman by paying her less then they would an equally qualified and experienced man and sexism when referring to those attitudes and beliefs that exist in our culture that can continuously guide women towards making different choices in life then men. Perhaps this paragraph from the middle of his article will add more clarity,

      "As I noted earlier, even if there were no unexplained part of the gap, and that economists found no discrimination in labor markets, it doesn’t mean there isn’t sexism elsewhere. For example, even if markets paid everyone exactly according to their human capital and job preferences, that human capital and those preferences could well be the result of sexism elsewhere in society. Suppose we had a law that prohibited women from attending college. It’s at least possible that gender wage gap studies would find no discrimination because women’s lower pay would be the result of their lower human capital. All that would show is that employers don’t discriminate, but it would hardly be cause for celebrating the end of sexism. The point people like me are making about the gender wage gap is that most of it is not the fault of sexist employers and that markets generally do pay people in accord with their skills and preferences. That’s all we're saying."

      In the next paragraph he also gives some examples of places where it might be better for everyone to focus their energies to try and reduce the pay gap. Some of these echo the comments you made regarding discrimination in school and choosing occupations,

      "Some of the best things we could do to equalize men and women’s pay involve making sure that we aren’t discouraging girls from entering majors and acquiring skills that lead to better paying jobs. Telling little girls that math isn’t for them, for example, contributes to pay differentials by affecting human capital. Similarly, we could do more to encourage boys to enter the supposed "feminine" occupations."

  3. The bias is implicit in the framing. When will hear about men earning 29% more than women and that their pay needs to be reduced?

  4. "The black unemployment rate is a myth because if you control for unequal education, terrible treatment by the justice system, and differences in a family structure a whole lot of it seems to go away! Also must not be caused by discrimination."

    or, you know, iq. except we're not allowed to talk about that.

    1. Good thing we have brave souls like you to post these reminders anonymously, huh?

    2. Intelligence is a complicated issue and not something that I feel like I can riff on very easily. I trust the psychologists that study this to let me know when there are notable racial differences in intelligence. So far my understanding is that there aren't, so what's the point of raising it?

      As for "allowed to talk about that", I don't know of anyone that is disallowing you. But given what appears to be the consensus among people who study this stuff, it seems to me that you shouldn't be surprised when people raise their eyebrows at non-expert who presume to pontificate on it.


All anonymous comments will be deleted. Consistent pseudonyms are fine.