Here’s something we don’t need a piece of research to tell us (though I’m going to tell you about a really good example): men with MBAs earn a lot more than women with MBAs. Most of the gap is explained by having children – which costs women but not men. Most of that parental-status tax costs women because they have to give up time at the office.
According to a recent article by economists at the University of Chicago and Harvard, who used data on UC Booth School alumni, men and women MBAs start earning about the same at the end of graduate school. But the earnings diverge over time. Nine years after MBA, men average around $400K; women, $250K.
This dramatic difference is much smaller for women who don’t have children. The authors opine that the lower-earning situation of MBA mothers is a consequence of “family constraints and the inflexibility of work schedules in many corporate and finance sector jobs” (p. 249).
A little more to the story: Women who partner (and have kids) with lower-earning men do not have dramatically lower incomes than men on average. And women who partner (and don’t have kids) with higher-earning men keep their wages up in a kind of competitive synergy.
So, with all this information, I was thinking, what if we really wanted to reduce gender inequality? What could we do? And here are three ideas. Like all policy interventions, there are costs and benefits; let’s see what they are and who bears the costs….
Idea number 1: no kids How about women not having children? It would be a bit like Lysistrata, except thanks to birth control, or the option to have sex with women instead of men, women could still have sex. This would make women workers earn more like men workers and should more quickly reduce the gender gap in earnings among MBAs.
The downside: No more yuppy kids. Might be hard on private school enrollments, sleep consultants, that kind of thing. So, maybe not having children won’t work.
Idea number 2: marry down How about women marrying down? Unlike the situation of MBA moms who marry up, marrying down means MBA moms work just as much as ever—and don’t decrease work hours except in the brief period around a child’s arrival in their lives. Though it turns out that when women have higher earning spouses they are more likely to take off time, when men have higher earning spouses, they still remain those “ideal workers” plugging along in the workforce. These are the true income maximizers! These couples are more likely to hire a nanny or use day care, while for man bread-winner couples, having their high-powered women stay home to do the day care themselves is another status marker.
The downside: It could be a little tough on some marriages, at least in the short run: Turns out that marriages with higher-earning or higher-status women are less stable (and harder on men’s health for richer people). Limiting people’s freedom to marry, like limiting their freedom to have kids, isn’t particularly appealing, either.
Idea number 3: work flexibility How about creating more flexible workplaces that don’t penalize men or women for time out or reduced hours? If we really wanted to reduce gender inequality, we could do this. We could stop marginalizing men who seek flexibility, and stop putting up barriers to women seeking the same. It would be a way to promote freedom to have children and care well for them, freedom to marry whom we want, and freedom to participate in the market place in ways that leave constraint behind.
The downside: The authors of this study note that many believe that it is in the “nature of the work” of the high-flying banking and investment world that makes this kind of change especially difficult, and report that such changes have come about a bit more in, for example, medicine. I think more sweeping change is possible. And then, there would be no more papers about that puzzling wage and wealth gap between men and women. Because it isn’t really that much of a puzzle.