Economics of Gender Disparities

This is post number 7 in a series of posts on sex and gender. In the past few posts I have been arguing against what I have called  "theory X". I will repeat that theory again here for those who stumble on this post. Theory X says:

Disparities between men and women automatically imply discrimination. A lessening of disparities is caused by a lessening of discrimination due to pressures of government, the feminist movement, or a general increase in enlightenment.

Theory X is connected to the theory that that boys and girls are identical at birth except for genitalia and that differences in behavior are "socially constructed". There are many people who believe this. Betty Friedan, author of the 1963 book The Feminine Mystique said:

Though the women's movement has begun to achieve equality for women on many economic and political measures, the victory remains incomplete. To take two of the simplest and most obvious indicators: women still earn no more than 72 cents for every dollar that men earn, and we are nowhere near equality in numbers at the very top of decision making in business, government, or the professions.

In the 1999 State of the Union address, Bill Clinton said, "We can be proud of this progress, but 75 cents on the dollar is still only three-quarters of the way there, and Americans can't be satisfied until we're all the way there." In other words, men and women ought to have the equal income and there is something terribly wrong if there is any deviation from equality of income.

But something about this line of thinking seems to defy common sense. According to economist John Goodman:

"Let's say I own a company and I am employing only men. Is it really true that I could fire all the men, replace them with women and lower my cost of labor by 23%? If I could do that why wouldn't I? If I were stupid enough not to do it, wouldn't a competitor of mine do it and drive me out of business?"

"In other words, if workers received substantially different pay for doing the same job, an employer would have to be leaving a lot of money on the table by not hiring the lower-paid employees. (Remember, most people who believe in pay discrimination also believe most CEOs are selfish, money-grubbing sorts as well.) And it can't just be one employer. In order for pay differentials to persist in entire industries, every employer in the market must be willing to discriminate — including the firms run by women!"

Economists in general are skeptical of the claims of that women are held back by employer discrimination. This video by the economist Thomas Sowell explains that accounting for some obvious variables such as child-bearing make the differences in income go away:

Similar commentary is given by economists Donald J. Boudreaux and Steven Landsburg. Even the respected magazine The Economist observed:

The main reason why women still get paid less on average than men is not that they are paid less for the same jobs but that they tend not to climb so far up the career ladder, or they choose lower-paid occupations, such as nursing and teaching.

In conclusion, I think that basic economics refutes theory X.