Economics of Inequality

In October 2023, Claudia Goldin, a groundbreaking economic historian and labor economist, became the first woman to receive the Nobel Memorial Prize in Economic Sciences. Currently the Henry Lee Professor of Economics at Harvard University, Goldin has spent decades tracing the economic history of women in the U.S., revealing the deep-rooted structures that continue to shape gender inequality today.

Before introducing data points and statistics, it’s important to differentiate between equality and equity. While equality focuses on providing the same resources and opportunities to everyone. Equity is realizing that each person starts from different places, hence will require different amounts of resources in order to reach the same levels of success.     

What is Economic Inequality?

Economic inequality isn’t just about who earns more. Goldin frames inequality as a multidimensional stage: influenced by factors such as wage gaps, labor structures, and education. Goldin argues that much of today’s gender inequality is structural, not simply driven by explicit discrimination. That’s a crucial distinction.

The Gender Wage Gap

The gender wage gap refers to the systemic differences between the salaries of men and women in all kinds of fields. In 2024, the national gender salary gap in the United States was 8.2%. The gender wage gap is not primarily due to just overt discrimination. According to Goldin, one of the most persistent causes is something she calls “greedy jobs”: jobs that reward long, inflexible hours and disproportionately penalize those, often women, who take time away for care giving. What results is a ‘motherhood penalty’.

The Evolution

Let’s talk stats. Between about 1820 and 1850, the era known as the industrial revolution in America, the ratio of female to male full-time earnings rose from about 0.3, its level in the agricultural economy, to about 0.5 in manufacturing. Women's earnings rose from about 30% of what men made to about 50%. To add, between 1950 and 1980, when so many married women were entering the labor force, the ratio of female to male earnings for full-time, year-round employees was virtually constant at 60%. There’s more. The gender gap in earnings decreased substantially during the eighties. By 1989 the ratio of female to male earnings for those who worked full-time throughout the year had climbed by about 8 percentage points to 68%. In the nine years from 1980 to 1989, 20 percent of the preexisting gender gap in pay had been eliminated. Per hour worked, women now earned about 75% of what men earn. 

Progress was made – but the path to full equity was still a long way to go.

The Role of Motherhood

After childbirth, women’s earnings often decline sharply relative to their male peers. This drop isn’t about personal choice or ambition: it’s about the structure of work itself, and how it fails to accommodate caregiving. As jobs have become more unstable and less lucrative, marriage rates have only stayed steady for those economically secure and higher educated. For others, particularly those in unstable or low-paying jobs, marriage has become increasingly intangible.