Is the gender wage gap explained by differences in productivity? An interview with Professor Yana Gallen

A vast literature has been developed on gender discrimination in the labor market. In 2018, women in the United States earned 80.5 cents for every dollar earned by men, according to the Census Bureau. In that regard, Dr. Yana Gallen published a paper titled “Motherhood and the Gender Productivity Gap,” in which she answered how much of the wage gap is explained by measurable productivity differences. Using data from Danish workers and firms, Gallen found that the wage gap is explained by productivity gaps for mothers but not for women without children, for whom only eight of the 12 percentage point difference was explained by differences in productivity.

Gallen is an assistant professor at the University of Chicago Harris School of Public Policy and received a PhD in economics from Northwestern University in 2016. She is a labor economist studying the gender wage gap, and we were happy to hear directly from her on this important issue. 

Can you explain the biggest contribution of this paper relative to other papers that try to explain the wage gap?

I think a big question has always been: How much is the difference between men’s and women’s average pay? When we measure wage, we can always control for occupation, age and other things, and the idea is that we also think that younger workers are more productive than older workers, so we want to control for that. So, rather than going through this indirect proof, this paper does a more direct estimation of employing a woman compared to a man, and how much does output change in that firm. It is directly looking at output differences, and those output differences are important because we would expect those differences in wages if it is true that men and women are [differentially productive].

Now, it is true that if there are occupational differences and big hours differences and that is what’s explaining most of the pay gap—that is not to say, “now we don’t have to worry about the pay gap because it is all explained by occupation”—that’s just where we [would focus] our attention. And that is very different than a pay gap that is explained by men and women doing the same work—having the same productivity—but women still being underpaid. That is the contribution of this paper, to nail down that the pay gap is less about explanations such as, “women just don’t ask for raises [at] the same rate as men,” and more about the stuff that women are doing in the job compared to men. Those are different things.

So, how should we interpret the productivity gap? And what would these results imply for working mothers? Should we still worry about this?

I think that “should we care about [it]” is a hard question. Because, suppose that we see in the data that mothers are not so much in management positions, and actually women [do] seem to prefer not to be in those positions after they have children. And why is that? They want this regular fixed schedule, and they want to be able to focus on other things like childrearing, and, for whatever reason, women are the ones that are making career sacrifices to do that and men do not seem to be—on average.

Then you have to ask yourself, should we intervene in that? Is that something that we consider bad? I don’t know the answer to that myself, and my future research is trying to get more at that. Because we have these weird norms, and you can imagine that everybody [could] just adopt different norms, that you don’t have to spend nine hours a day of active hours with your children—you can do a little bit less, pay somebody to take care of them, spend a little more time at work, and if it doesn’t affect anybody except through the norms that society has—then that is something that we can think about changing. But if it really is some inherent preference that people have, then I think it is harder to say that we should change this. Perhaps we would be making everybody worse off if we change it—[because] they are making this choice for a reason. And I think that separating whether this is about something arbitrary or historical—like norms—versus preferences is actually very difficult because they are intertwined. It is hard to think about preferences without the norms of the society that we live in.

How about non-mothers? What does it say about the market that these young women are still earning less for the same productive work?

I think that this is the surprising finding of the paper, that women without children are underpaid [although] they seem to be as productive or even more productive than men. So why is that? I think that one explanation is that employers think that [childless women] are going to have children soon. I cannot do an experiment; I am only just observing these groups, and there is all kinds of selection into them and all kinds of things correlated to productivity, so it is hard to nail down exactly why women without children are underpaid. But I think the most logical story is the “statistical discrimination” story, and other stories are hard to square—like if they are bad negotiators, why do they suddenly become better negotiators when they become mothers? That’s strange.

What are the policy implications of your results? Where should we focus policies intended to address the gender wage gap?

This is one of a couple of papers that have highlighted this big difference between mothers and women without children, and I think that when we talk about policy, we have to think about what’s driving these behavioral differences. One thing that we can see in the data is what mothers are doing with their time when they are not working: They are spending a lot of it with children, even when they are high-skilled or have a very high wage. A lot of the productivity loss is because day care centers close at three, and everybody picks up their kids around then, and it’s the women that are picking up the kids, and it is women that are working fewer hours. So, I think that a lot of that working gap is about working less time.

I think this indirect measure of output is good for telling us that probably we are not measuring hours as well as we could. If firms are paying workers their marginal product and we forced firms to shift to paying women more through policy, then firms might decide that they will not hire a woman. I think in that sense, policies that help women [become] more involved with the firm—if that’s something that we want to achieve—might have a chance of moving the pay gap. Policies aimed at subsidizing work for mothers, [providing] more childcare or things that get women back in the labor force faster, would be more effective in narrowing [the] differences that happen right around motherhood.

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