Nobel Prize 2023 in Economic Sciences

What’s in today’s article?

• Why in news?
• Economics Nobel
• News Summary: 2023 Nobel Prize in Economic Sciences
• Key findings of Claudia Goldin
• Significance of Goldin’s research

Why in news?

• The Nobel economics prize was awarded to Harvard professor Claudia Goldin for research that has advanced the understanding of the gender gap in the labor market.
• She has studied 200 years of women’s participation in the workplace, showing that despite continued economic growth, women’s pay did not continuously catch up to men’s.
• She also pointed that a divide still exists despite women gaining higher levels of education than men.

Economics Nobel Prize

About:

• A Nobel Prize in Economics was not part of Alfred Nobel’s 1895 will that established the other prizes.
• The prize is based on a donation received by the Nobel Foundation in 1968 from Sveriges Riksbank (Sweden’s central bank), on the bank’s 300th anniversary.
• It is formally called the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel.

Economics Nobel and women:

• Goldin is only the third woman to win this honour. 
• In 2009, Elinor Ostrom got the award along with Oliver E Williamson, while in 2019, Esther Duflo shared it with Abhijit Banerjee and Michael Kremer.

News Summary:2023 Nobel Prize in Economic Sciences

Key findings of Claudia Goldin

• Older data gave more perspective
• Goldin reached back to older data to reveal that before industrialisation, more women were likely to have been involved in economic activity related to agriculture and various cottage industries. 
• With greater industrialisation, work was concentrated in factories, and women found it difficult to leave their homes and travel to work.
• This trend reversed in the early 20th century, with the growth of the services sector.
• The limitations of marriage
• She found that by the beginning of the 20th century, while around 20% of women were gainfully employed, the share of married women was only 5%.
• Goldin noted that legislation known as marriage bars often prevented married women from continuing their employment as teachers or office workers. 
• Despite an increasing demand for labour, married women were excluded from parts of the labour market. 
• This type of legislation peaked during the 1930s’ Great Depression and the years following it. 
• Goldin also demonstrated that there was another important factor in the slow reduction of the gap between men’s and women’s rates of employment, namely women’s expectations for their future careers.
• Women’s expectations were based on the experience of their mothers, and thus their educational and professional decisions were not taken with the expectation of having a long, uninterrupted, and fruitful career.
• Contraceptive pills
• By the end of the 1960s, as easy-to-use contraceptive pills became more popular, women could exercise greater control over childbirth and actually plan careers and motherhood. 
• Women also ventured beyond the services sector, studying subjects like law, economics, and medicine.
• Now, women were catching up in terms of education and fields of employment. 
• However, one glaring gap still remained and continues to this day — the gender-based pay gap.
• Pay gap and parenthood
• Till the time men and women worked in factories, where the pay depended on the day’s countable output, the pay gap was not too high. 
• It became wider when monthly pay contracts came into the picture. 
• One factor significantly impacted how men were paid versus women — childbirth. 
• As women had to shoulder more of the parenting responsibilities once a child was born, they were also punished for this at the work front in terms of a slower rise on the payscale.
  • Goldin and her co-authors demonstrated in an article from 2010 that initial earnings differences are small. 
  • However, as soon as the first child arrives, the trend changes; earnings immediately fall.

Significance of Goldin’s Research

• Goldin’s research does not offer solutions, but it allows policymakers to tackle the entrenched problem.
• She explains the source of the gap, and how it has changed over time and how it varies with the stage of development.

Q1) What is Sveriges Riksbank Prize in Economic Sciences?

The Sveriges Riksbank Prize in Economic Sciences is an annual award given to an individual or individuals in the field of economic sciences who have produced work of outstanding importance.
The prize was established in 1968 by Sweden's central bank, Sveriges Riksbank, in memory of Alfred Nobel, the founder of the Nobel Prize. The prize is administered by the Nobel Foundation.

Q2) What was Alfred Nobel?

Alfred Bernhard Nobel (1833-1896) was a Swedish chemist, engineer, inventor, businessman, and philanthropist.

Source: Economics Nobel 2023: How Claudia Goldin shed light on the status of women in the workforce | The Hindu