The Gender Gap in Wages: Productivity or Prejudice or Market Power in Pursuit of Profits

Explanations of the gender pay gap and related labor market segregation remain fiercely debated. On the one side are those economic historians who take a primarily neoclassical view, in which competition among workers and employers eliminates wage differences that do not reflect productivity and occupational segregation that is not the outcome of choice. Persistent discrimination must reflect anticompetitive institutions, for instance, trade unions. A corollary of the neoclassical perspective is that markets are liberating, freeing agents, including women, from cultural stereotypes and ensuring that they get paid what they are worth, although of course this need not imply wage equality if there are gender differences in productivity. On the other side are those cultural historians who interpret wage differences as reflecting custom and, as far as women are concerned, the cultural deprecation of women's work, while occupational segregation represents gender stereotypes of fit work for women. In this view, socially and culturally constructed gender identities can influence market outcomes, producing discrimination in wages and work that persists even in the face of competitive forces. A third perspective, which I want to introduce, is that of the political or heterodox economist, who might share with the neoclassicist the view that market processes are important and mold social norms while rejecting the Whig view of how markets work, particularly the idea that markets are liberating. Instead, the heterodox economist is inclined to see markets as captured by powerful elements in society that use them to reproduce their own wealth and status. Markets may generate inequality, including gender subordination, rather than equality.

Different as these interpretations are, most neoclassical economists would accept that social norms and cultural stereotypes sometimes influence where women work, what skills they can acquire, and how those skills are perceived, while most cultural historians would accept that women's pay and access to work respond to severe market pressure (wars, famines, etc.). Moreover, culture and the market are observationally equivalent, which makes it difficult to discriminate between the two views. Both positions would predict, for example, that wage gaps and the underrepresentation of women will be most severe in heavy industry, in the neoclassical case as a result of comparative advantage and self-interested sorting, in the culturalist case as a result of the clash between the representation of the heavy industrial worker and a feminine stereotype.

Joyce Burnette has long been an uncompromising advocate of the power of the market and of its benefits, backing up her position with sophisticated analysis and meticulous historical research. Gender, Work, and Wages in Industrial Revolution Britain is the culmination of painstaking years of searching out and studying evidence on relative wages and occupational segregation. In competitive parts of the market, Burnette holds, lower female wages were caused by women's lesser strength and child care responsibilities, which rendered them less productive than men. Comparative advantage directed women to jobs that required less physical strength and that could be combined with child care. Occupational segregation was not the cause of the wage gap but a way to shelter women from "the full force of their lower productivity" (Burnette 2008: 137). In uncompetitive parts of the market, barriers to entry disadvantaged women workers, and men's trade unions were the main culprits. Sex role standards and social norms were developed to justify market outcomes or to disguise unions' self-interest. Burnette's coherent neoclassical exposition is theoretically sound, carefully supported, and engagingly written, but room remains for other arguments and explanations.

My doubts take three forms: first, I am worried about the scale of Burnette's evidence; second, I am dubious about the meaning and importance of physical strength; and third, I cannot see early modern labor markets working like neoclassical ideal types. My reservations relate not to some rent-seeking disruptions of allegedly efficacious competitive forces by chauvinist trade unions (which were illegal until 1824) but to deeper intrinsic aspects of capitalist labor markets. Finally, market outcomes, even if "optimal" in an economist's sense, usually reflect the distribution of wealth and power in the society and...