Nobel Prize in Economics Awarded to Harvard’s Claudia Goldin for Work on Gender Gaps

BOSTON—Harvard University’s Claudia Goldin is a labor economist, teacher and mentor. She is now also a Nobel Prize winner for her groundbreaking research on women in the workforce.

Goldin was awarded the Nobel Prize in Economic Sciences on Monday, the third woman to receive the economics prize since the award started in 1969. The 77-year-old Harvard economist has spent decades analysing troves of data to produce research illuminating the history of women’s job-market experiences.

Goldin’s expansive work portfolio includes pieces on the drivers of female labor-force participation, the origins of the gender pay gap and hiring biases against women. Her paper, “Why Women Won,” which documented the evolution of women’s legal rights, published this month.

The winner of the 2023 Prize in Economic Sciences in Memory of Alfred Nobel American economist Claudia Goldin is seen on a display at the Royal Swedish Academy of Sciences, in Stockholm on October 9, 2023. (Photo by Jonathan NACKSTRAND / AFP) (Photo by JONATHAN NACKSTRAND/AFP via Getty Images)

“Goldin’s discoveries have vast societal implications,” said Randi Hjalmarsson, professor of economics at the University of Gothenburg in Sweden.

Goldin was admittedly tired upon entering Monday’s press conference at Harvard. She was, after all, asleep when she received the early-morning call with the news of her Nobel Prize. Still, her passion regarding decades of research and relationship-building radiated as she spoke at a press briefing.

“The increase of women in economics is important for a host of reasons,” Goldin said. “For me personally it has been important because I have had the most wonderful co-authors.”

One such co-researcher, Claudia Olivetti of Dartmouth College, said Goldin’s body of work has shaped much of the current research on women and labor markets. Perhaps less well known, Olivetti said, is Goldin’s extraordinary mentorship of women.

Goldin “has been a source of inspiration to many women in economics, generously sharing her experiences and demonstrating the possibilities of success,” Olivetti said.

Some professors view themselves as researchers, rather than teachers. Not Goldin.

“I could never do research without doing teaching,” she said. “When I teach, I am forced to confront what I think is the truth.”

Goldin was the first woman to secure tenure in Harvard’s economics department. She follows Esther Duflo in 2019 and Elinor Ostrom in 2009 as female recipients of the economics Nobel Prize.

Goldin is married to Lawrence Katz, also a Harvard economist. Both are avid bird watchers and hikers, colleagues said. She has a 13-year-old golden retriever named Pika and no children.

Around the world, 50% of women have paid jobs, compared with 80% of men, although that gap is smaller in advanced economies. Across the developed economies, women earn 13% less on average and are less likely to play senior roles in the organisations they work for.

Goldin’s research questioned the assumption that women had steadily, or would inevitably, narrow those gaps. Using data that had previously attracted little attention, she established that far fewer women worked in paid employment in the early 1900s than in 1800, while that share rebounded as the 20th century advanced, albeit slowly.

Her writing includes 1990’s “Understanding the Gender Gap: An Economic History of American Women.” Examining 200 years of data, Goldin tracked the changing fortunes of women in the workplace as it changed from farm to factory to office.

She also identified some of the considerations that affected the decisions made by women about their participation in the workforce, as well as the constraints they faced at particular times. In one well-known paper, she examined the effect of the contraceptive pill on decisions about work and marriage.

The pay gap between male and female workers had long been attributed to differences in educational attainment, with women typically spending fewer years in formal education.

But that can no longer be true of many developed countries, where women are now better educated on average than men. Instead, Goldin’s work indicates that the gap in pay occurs with the birth of a first child, with women typically devoting more time to child care.

But darker forces are also at work. In one paper, Goldin and co-author Cecilia Rouse from Princeton University showed that the number of female members of the leading U.S. symphony orchestras rose sharply in the 1980s partly because of the adoption of “blind” auditions, where the candidate for an orchestra position auditioned behind a screen, concealing their gender or race from those doing the hiring.

In their paper, called “Orchestrating Impartiality: The Impact of ‘Blind Auditions’ on Female Musicians,” the authors found data across decades of hiring by symphonies both before and after the introduction of blind auditions to show that about a quarter of the increase in female members of orchestras over that time was due to blind auditions, suggesting previous bias.

Colin Saint-Vil got his money education at the dim sum cart, over a steamy plate of pork buns and turnip cake.

A friend offered to pick up the whole tab on her credit card, “for the points.” At the time, six years ago, “for the points” meant nothing to Saint-Vil, now a 30-year-old planning manager in Brooklyn, so he pressed for more details. They lingered over the dim sum meal as a larger conversation unfolded about annual percentage rates, credit-card debt, payment schedules and more.

Millennials and members of Gen Z prefer to seek financial advice from each other than from parents or from financial professionals. They don’t like overwhelming spreadsheets and marketing material written in seemingly foreign languages. They don’t trust big banks and institutions trying to sell them on investment strategies—as many were raised around the late 2000s financial-crisis. And, they are not wrong: There is a lot to be learned from comparing numbers with peers—from sharing salaries to talking out big decisions like home or car purchases.

Saint-Vil said when his father was his age, he had already begun investing in real estate, but with property prices now so high and mortgage rates only just beginning to fall, he said he couldn’t imagine being able to follow in his father’s footsteps. He, like many millennials and Gen Z-ers, describe their finances as “fairly good” these days, though they hold a negative picture of the greater economy, according to a new poll of 18 to 29-year-olds from the Institute of Politics at Harvard Kennedy School.

Millennials are still reeling from the impact of back-to-back recessions, all while large bank closures and investing scams dominate the headlines. Younger people report a feeling of “financial avoidance” exacerbated by high inflation and the pandemic-era budgeting.

As of June 2023, Gallup polling revealed a historically low faith in U.S. institutions, with younger generations voicing high skepticism. According to Gallup, only 9% of respondents aged 18 to 34 expressed “a great deal” of confidence in banks; meanwhile, 47% and 28% said they have “some” or “very little,” respectively.

But when it comes to winning back young consumers, these same financial institutions haven’t quite given up, and are rolling out new outreach programs and robo advisors, some of which have helped bridge a connection with Gen Z and millennials, said Keith Niedermeier, clinical professor of marketing at Indiana University. But many young people still say they prefer do-it-yourself investing platforms like Robinhood and Acorns over traditional advisers at more established wealth-management firms.

Andrew Ragusa, a real-estate broker based on Long Island, blamed the twin problems of low housing inventory and high home prices for postponing younger buyers’ ownership. The median age of a first-time home buyer in the U.S. is 35-years old as of 2023, according to data from the National Association of Realtors. That is slightly down from an record high of 36 in 2022, but still two years older than the median age in 2021, which is representative of an ageing first-time buyer trend.

When he talks with younger clients now, he detects a gloomy sentiment. “They try to be optimistic, but the overall sentiment is ‘This is supposed to be the American dream: we get a house and we get some financial security and I just have to have faith it will all work out in the end.’ But they don’t have faith it will.”

Fear and shame around being able to buy or accomplish as much as one’s parents might have financially can crop up when millennials talk to elders about their financial frustrations, said Jodi Kaus, director of Kansas State University’s student financial planning centre, Powercat Financial. She’s found that lessons and advice from friends are often more constructive.

Kaus leads a peer-to-peer financial planning centre that pairs up students to work through financial issues. She works to pair people with similar backgrounds: graduate students with graduate students or international students with international students. Talking with someone only a few years removed from your current situation means you’re better able to internalize the messages and execute on their advice, Kaus said.

“Early on, parents even say ‘Are you sure students can help my child?’” she said. “And I say ‘I am more than confident that they can help each other.’

Sharing money tips and financial know-how with your friends doesn’t only benefit the asker, Kaus said. In the Kansas State University peer-to-peer group, the advice giver also learns a lot from their own position, because sharing their story and bonding with a peer helps them to build their own confidence and belief in their financial acumen.

Lindsay Clark, a 34-year-old director of external affairs in Washington, D.C., recalls one lesson she shared with a friend carrying student loans from pharmacy school. Clark works at Savi, a student loan platform, and she offered to cook her friend dinner while they sorted through his loan repayment options. Long after they’d cleaned their dinner plates, they sat together at Clark’s kitchen island, lingering over a plate of homemade hummus and chatting about everything from financial goals to Costco card benefits.

“Those conversations blossom from the transparency, and the visibility makes both people feel really good,” she said. “That creates better relationships overall.”

When you’re talking about money issues with friends, Clark said, you’re not artificially inflating your salary or pretending to know more than you do. And most important, you’re not worried about their ulterior motives.

“You feel safe in that conversation, knowing their intentions are good and they’re not trying to make money off of you,” she said. “And that’s going to lead to better results, because we’re working with the reality here.”

Skepticism of pronounced experts and criticism of established financial institutions is especially common among millennials and Gen Z, Neidermeier said. Studies show people across generations are much likelier to take a friend or colleague’s recommendation to heart over that of a faceless institution, he said; people who spend time on social media just have a greater opportunity to source those answers and field questions.

“What people say to each other over the picket fence is what is the most influential,” he said.

At a certain point, however, talking solely to friends and peers for your financial lessons can be very limiting, said Sarah Behr, founder of Simplify Financial Planning in San Francisco. Relying on your social circle can also put a strain on those relationships; no one wants to be responsible for your disappointment when a financial decision that worked out well for them doesn’t fit as well in your own life.

Behr recommends tuning into your own emotional reactions when assessing peer advice: does the road map they followed align with your own financial values? Does it put pressure on you to live outside your means or challenge your personal risk tolerance? If the answer doesn’t feel clear, that could be a time to outsource to a financial professional who has no emotional connection to you or your financial status.

“‘People have been telling me do this, but I just don’t know if it’s the right thing for me’—I get a lot of calls like that,” said Behr.

Saint-Vil said he and his friends share tips on what high-yield savings accounts offer the best rates, and when he did his credit card research, he chose a card recommended by a friend. When it comes time to work with a financial adviser or even one day a wealth manager, he’ll likely work with someone recommended through a peer. Behr said close to 90% of her business comes by way of client referrals.

Since that first conversation over dim sum, Saint-Vil has thrown his own card onto the table at meals and shared his knowledge with other pals who look confused.

“I have a real wide range of friends who are in many different financial places, but I would say a rising tide lifts all ships,” he said.

Julia Carpenter is the co-author, with Bourree Lam, of The Wall Street Journal’s “The New Rules of Money: A Playbook for Planning Your Financial Future,” a personal-finance workbook published this week by Clarkson Potter, an imprint of the Crown Publishing Group.

Nobel Prize in Economics Awarded to Harvard’s Claudia Goldin for Work on Gender Gaps

Economic historian and labour economist has tracked the changing fortunes of women in the workplace

Millennials and Gen Z are turning to peers instead of professionals for financial advice. They don’t trust banks, and they are tired of information overload.