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Claudia Goldin won the 2023 Nobel Memorial Prize in Economic Sciences. She is best known for her research on women’s earnings and labor-market participation since the 1800s and for why there is a gender pay gap.
She finds that childless men and women earn about the same, but having children reduces women’s earnings because they mainly bear the costs of combining work with family and have limited workplace flexibility. Goldin has also studied the economic effects of education, technological change, immigration, the Civil War and corruption.
In her paper, The Economist as Detective, she writes the three elements of her research projects are 1) ideas, 2) theory, and 3) data and empirical methods. She notes she works best by considering all three at once. Reading books on a subject gives her ideas, and from the ideas, she develops simple models. The models suggest data, and the data leads to revising the ideas and theory. She continues this iterative process until she senses she has discovered the truth about the question she is studying.
For example, when studying the history of education in the 20th century, she recalled her grad-school teacher, Gary Becker, asserted that while current returns to education were high, they must have been higher before World War II when educational attainment rapidly increased.
By examining various data sources, she found that the expansion of secondary schooling from 1910 to 1940 was much faster than national data suggested. She established that, by the early 1920s, the large and sudden shifts in education caused a collapse in the premium to white-collar office workers relative to production workers. However, newer high-technology industries also employed higher-skilled high school graduates. These technological changes increased the demand for skilled workers. But increases in education also increased the supply of skilled workers.
In studying unrestricted immigration in the United States before the 1920s, she notes that immigration restrictions almost became law in 1897 and 1898. However, the political demand to reduce immigration declined as the economy expanded. Moreover, the early 1900s flood of European immigrants increased pro-immigration constituencies in big cities. In most urban and industrial centers with few immigrants, workers experienced downward pressure on wages from the new immigrants. They joined rural residents in opposing unrestricted immigration, ultimately leading to immigration restrictions in the 1920s.
Goldin is a worthy Nobel winner who does excellent work. She shows us how the past helps to understand the present.•
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Bohanon and Horowitz are professors of economics at Ball State University. Send comments to ibjedit@ibj.com.
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