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Markets happy to pay lower wages for more flexibility

Commentary: Why do women earn less than men? A recent study by Matthew Wiswall and Basit Zafar has made progress on this topic. They presented a group high achieving college students attending elite schools with a set of hypothetical job choices.

The hypothetical jobs varied in their pay and work requirements. Some had higher pay but offered less flexibility and required long work hours. Other jobs had lower pay but offered a better work-life balance.

The students were asked to rank the jobs from most to least desirable. There was a clear gender preference. Women preferred jobs offering a better work-life balance; men preferred jobs that paid better. For example, based on their job-rankings, women were willing to accept a 7% lower salary in exchange for work-hour flexibility, men only 1%.

Guess what. In follow up interviews of the now former students, the researchers found that women compared to men selected jobs that paid less but offered greater work-hour flexibility. This preference for flexibility accounted for 25% of the difference in gender pay among the survey group.

Now generalizing a study like this to the general population is a bit of stretch. After all the students were from elite universities who had their choice among several job offers. We normal people often don’t have these types of choices and have to take what we can get. Still if we take the study at face value, it does raise some interesting issues.

First, lower female wages are, at least in part, not due to economic discrimination. Rather capitalism is doing what it does best, which is offering consumers—in this case consumers of job attributes—what they want. Women are willing to sacrifice wages for flexibility and the market provides them the opportunity to so do. Win-win.

But this begs the question: Why are women willing to accept lower wages? Does society systematically push women into lower compensated jobs so as free them to care for family at the cost of their own careers? Does this represent social discrimination toward women?

But of course, you can turn this on its head. What is driving men to sacrifice personal autonomy, to shackle themselves to a job that doesn’t allow the freedom to come and go as their personal lives demand, just for a few more pennies? Perhaps it is men who are being discriminated against by society, forced into less than satisfactory, although better compensated, roles.

There is some evidence for this from the realm of labor laws, which protect workers from exploitation by employers in regard to working conditions and hours. This is true more so in Europe than the United States. The EU, for example, mandates at least four weeks vacation per year. Austria goes further, mandating 38 days off.

These laws exist precisely to protect workers from themselves by limiting the freedom to contract with employers. Women can be trusted to take care of themselves apparently, but men are the problem.

Christopher A. Erickson, Ph.D., is a professor of economics at NMSU. He likes reading economics journal articles, which in turn, inspire some of his columns. The opinions expressed may not be shared by the regents and administration of NMSU. Chris can be reached at chrerick@nmsu.edu.