"Malaysia Prime Minister Mahathir Mohamad and the Sultan of Johor are seen in a blue Proton Saga... "When asked whether there is any tension with the sultan, Dr Mahathir said: “No, I don’t see anything because I went to see him and he drove me to the airport. I don’t want to comment on the sultans because if I say anything that is not good then it’s not nice because he is the sultan”"

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Friday, March 12, 2010

Women earn less than men because they took softer classes, have less experience, work less

"...when you have eliminated the impossible, whatever remains, however improbable, must be the truth." - Sir Arthur Conan Doyle


Dynamics of the Gender Gap for Young Professionals in the Corporate and Financial Sectors
Addendum: Bertrand, Goldin and Katz

"Although male and female MBAs have nearly identical (labor) incomes at the outset of their careers, their earnings soon diverge, with the male annual earnings advantage reaching almost 60 log points at ten to 16 years after MBA completion. We identify three proximate reasons for the large and rising gender gap in earnings: differences in training prior to MBA graduation; differences in career interruptions; and differences in weekly hours"

In other words, women are paid less because they are less well-trained (they take fewer finance courses and have lower GPAs), take time off from working and work less.

In fact if anything it seems men are discriminated against in this sample.

Other studies show similar results for different and more general professions.


"Women in our sample with children are not negatively selected on predicted earnings; MBA mothers are, if anything, positively selected on business school performance and earnings in the first few years following MBA completion"

"Among women without children greater spousal earnings appear to increase, rather than decrease, labor supply. In fact, a woman without children married to high-earnings spouse is about as likely to work (the gap is only 2 percentage points), to accumulate post-MBA work experience, and to put in a long work week (women are actually higher by 3 log points) as the typical male in our sample. These findings suggest positive assortative mating based on preferences for work"

"Labor supply factors explain most of the remaining gender gap in earnings... Augmenting the model with (arguably less exogenous) variables to control for reasons for choosing one’s current job, job function, and employer type further reduces the coefficient on the female dummy to a (statistically insignificant) –3.8 log points"

"Although it is possible that women are more heavily penalized for taking time out, estimates from separate earnings regressions by sex... do not support that suspicion... Taking any time out appears more harmful for men (26 log points) than for women (11 log points)."

"Married women have slightly higher predicted earnings than unmarried women and those with children have slightly higher predicted earnings than those without children, using a measure of predicted earnings based on pre-MBA characteristics and MBA performance"
I suspect omitted variable bias due to aesthetic appeal here. In other words, pretty women earn more.

"If MBA mothers were being sidelined in their current jobs, one might have expected them to be more likely to quit (or even be forced out) for career-related reasons. Yet, we find little evidence of that"

"Female MBAs appear to have a more difficult time combining career and family than do female physicians, PhDs, and lawyers... female MBAs often have husbands with higher earnings than female PhDs and MDs allowing them the luxury to slowdown in the market and spend more time with their children"

Keywords: "University of Chicago", "Why Isn't Laura CEO", "6 months or more"
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