Why your pharmacist has the key to shrinking the gender wage gap

Claudia Goldin:Having flexibility in the hours that you work is important, or being able to control the hours that you work. I don't think that there's anyone who is anything but retired who would say that it wouldn't matter.

There are various ways you can think of that. You can think of it as the actual number of hours — if someone said to you you have to work 120 hours per week, you might find it very difficult. So the number of hours matters. It's also the actual time, so predictability might matter. I might say to you, "You might have to work 40 hours, but I'm going to tell you when they are a day in advance or an hour in advance." And that wouldn't be very good.

There's also when the hours are. It may be that you do very well with a 35- or 40-hour-a-week job that goes, let's say, from 8 to 5, but every now and then you need to do something at 11 AM or at 4 PM, and you're willing to make up the hours earlier or later or on the weekend. That would be temporal flexibility.

The question is, why is this important for some people but not for others? Well, it's pretty clear that individuals that do not really care about the hours they work, those are people for whom this obviously doesn't matter. But probably for 90 percent of the labor force it does matter, because they might have a desire to sleep, for example, or shop or go to the doctor themselves or the dentist.

So the people who require this the most are the people who take most of the responsibility for things that go on in the home. And the most important of those responsibilities generally concerns things that are alive, and I don't mean green plants; I mean kids.

Clearly, individuals who take responsibility for kids have the greatest demand for the type of multifaceted flexibility that I was just referring to, and it just so happens that those people are disproportionately women.

CG: It may be that you won't be able to find it in investment banking, which is what you chose to do. But the important thing is for you to find a line of work in which it's not simply that there is flexibility but that the cost of it [is low].

If you said to me, "I really like jewelry," I would say "OK, go out and get some jewelry." then you go out and say, "This is expensive stuff." Well, you didn't ask me about the price.

So it's the same thing here. the price can be very high, or it can be very low. And it depends upon what you want. Not all women have demands for temporal flexibility, and not all men don't like temporal flexibility. So it depends upon what each person puts a value on and whether at 22 years old they actually know what they put a value on.

CG: Just about anything in the health sector. The key issue here is substitutability among employees. So clients, patients, and customers have to be convinced that your professionals are very good substitutes for each other. Also having great IT systems and informational tech systems is crucial as well.

CG:I mean, take for example accountants. There are people who somehow think that "my accountant really knows me."

Baloney! Your accountant is doing your taxes. I can do your taxes on TurboTax, and I don't know you at all. So what do you mean your accountant knows you? Your accountant knows what parts of the tax code you want to take advantage of? You trust your accountant because you don't know diddly squat about the tax code? It's not clear what this means.

So therefore standardization of the product — the inputs, the outputs — is what's going to drive the greater substitutability. In each of these cases, one has to think hard about why it is it seems like people aren't good substitutes for each other when, in fact, they probably are.

Is it just that [lawyers] are just trained differently? Is it that there are bad law schools or good law schools? Well, you can just look for people from the good law schools and pay the premium for those. But you can work in a group. So you walk into the group, and there are five people in the group, and you just take the one who's there.

That's what we do for anesthesiology and obstetrics. so why can't we do it for lawyers?

CG: There are lots of numbers, and if they're built up from different sources, we can figure out how they're constructed, and therefore they're real numbers.

But now you're saying, "What are we holding constant?"

That number is actually a ratio of two medians, and it's for full-time, full-year workers. So there's a lot of things we're already holding constant.

But one of the big issues in that is it aggregates young workers and older workers. And young workers have much, much narrower wage gaps than older workers do.

By aggregating them we're hiding exactly what's going on by doing that because of the baby boom, because the fraction of workers in various age groups is actually changing a lot over time, because the baby boom is working through the distributions, just like the mongoose through the snake.

The mongoose works its way down the snake. So that gap every year it looks like it's constant when in fact for each age group the gap is decreasing.

CG: No. They're not thinking ahead, just like when they cross the street they don't look to see if a car is coming at them. They're immortal.

Unfortunately for me, all the models that I construct have rational forward-looking agents, and my students don't seem to be as forward-looking as they should be. Or maybe they really are and they just don't want to talk about it.

But the question is still valid, even though people might not come to me and ask me.

After all, I am a professor. I'm not their guidance counselor. And around Harvard there are a lot of people holding their hands, and [students] don't view me as a hand-holder, although God knows I've used up many boxes of tissues in my office. So why don't you ask the question again slightly differently?

CG:It's pretty clear why women fall behind, and i'm not going to tell them not to have kids. For sure i'm not going to, and I'm not going to tell them to have kids and abandon them. I'm not going to tell them to create good relations with their parents so that their parents take care of their kids — and I have friends who manage to do that.

So the answer is to, as one of my students once said to me, "Find a partner who wants what I want." I thought that was a wonderful way of putting it.

Now, that can be very costly if both people have jobs that have these very high penalties for flexible hours, because someone has to do it. And if you both do it, then you're both paying the penalty.

So if there's a resentment factor, wanting what I want means that you understand the resentment factor, and you will go the distance so that there is no resentment. Resentment is not going to be a good way to live your life, and you'll just have to pay a lot for it.

And paying a lot for it is not just buying nannies and buying good schools. Paying is paying because you're not going to possibly make partner in one of the big law firms.

As much as I admire Sheryl [Sandberg] and admire everything she wrote in her book, the real advice for men is to do just the opposite, is to lean out. If all men leaned out, we would have the solution.

If all men leaned out, then law firms would have to convince their clients, just as hospitals did, that they have a group of lawyers that are perfect substitutes for each other. They would have to adopt information technology to do handoffs.

It all has to do with costly handoffs. That's the whole key. If handoffs are costly, then the firm is going to pass these costs onto the workers. But if handoffs are not costly, it will be like pharmacists. There will be temporal flexibility at no additional costs.

CG: But you have to do a good job of it. You can't screw up.