Wednesday, March 22, 2017

Can Financial Incentives Reduce the Baby Gap? Evidence from a Reform in Maternity Leave Benefits with Anna Raute

As women’s educational attainment and labor market participation have increased, so too have concerns about decreasing birth rates and below-replacement fertility levels. All OECD countries other than the US provide paid parental leave in order to reduce the cost of childbearing. However, the structure of parental benefits may affect different groups in different ways. This week’s WAPPP seminar featured Anna Raute, WAPPP Fellow and Assistant Professor in Economics at the University of Mannheim, as she presented her research on the effects of the 2007 German parental leave reform.

Highly educated and high-earning women tend to have fewer children than lower-educated and lower-earning women, leading to what researchers have called a “baby gap” between these two groups. For highly-paid women, having children is associated with a greater opportunity cost than for women who are less well paid. In Germany, this manifests in a stark difference in number of children born to highly-educated versus lesser-educated women, as well as a large gap in the percentage of childless women. Close to one-third of highly educated women in Germany never have a child, compared to 18% of lower-educated women (here meaning women who have completed a high school degree but no vocational training or tertiary education). However, in other countries with family policies, such as Sweden, this gap in childlessness or number of children is not quite so stark. The structure of family policies may affect these figures.

Prior to the 2007 reform, parents received a fixed sum of 7,200 euros per child. However, after the reform, parental benefits were linked to the mother’s pre-birth earnings. Rather than the flat payment, mothers could receive between 67-100% of their pre-birth earnings, up to 21,000 euros per child. Prior to the reform, lower-earning mothers were getting a much greater relative benefit from parental benefits than their higher-earning peers. By contrast, with the new reform, higher-earning women stood to benefit much more from wage replacement than from the flat payment, which may have decreased their perceived opportunity cost of having a child.

The key question, Professor Raute asks, is whether fertility post-reform exhibited differential changes across the income and education distribution. Much of the prior literature on parental benefits focuses on cash transfers and welfare programs that provide greater incentives for lower-income mothers than higher-income mothers. This study provides a critical window to examine whether high-earning and highly-educated women are less elastic, or whether they too react to financial incentives in terms of their fertility.

Nine months after the implementation of the law, there was a statistically significant increase in the average monthly birth rate per thousand mothers, as well as a small drop in the number of abortions. In addition, the rate of IVF between 2006 and 2011 increased by 33%. The increase in fertility nine months after the law’s implementation translates to an additional 2,300 children born per year.

Using German pension data, Professor Raute examined this increase in terms of income and education level. This birth data reveals that medium- and high-earners benefitted substantially from the new reform. While benefits for lower-earning mothers did not change substantially pre- and post-reform, medium-earning mothers received an additional 4,000 euros, on average, and high-earning mothers received an additional 8,000 euros. If the difference in these benefits affects fertility, we should expect to see a relative increase in fertility for women who are benefitting greatly from the reform versus those who are not benefitting as much.

For women who are below the median income, there is not a statistically significant change in the probability of having a child. By contrast, for women who earn above the median income, fertility increases for each income bracket. Overall, each additional 5,000 euros in expected benefits raises the probability of having a child in a given year by 6%.

Professor Raute observes the same effect when examining education. Post-reform, the average probability of having a child increases by 6% for medium-educated women and by 13% for highly-educated women.

Given the recency of the reform and the lag in available data, these are only short-term effects. Professor Raute examined women at the end of their fertility cycle in an effort to understand whether we might see a permanent effect on fertility and for which groups. Indeed, for women at the end of their fertility cycle, each additional thousand euros in benefits increases mean fertility level from pre-reform levels by 5.1%. This strong effect indicates that we might expect to see a permanent effect of the reform on completed fertility.

In addition, there is a significant increase in fertility for women ages 40-45. This effect seems to be driven by women who already have one child and decide that – now that it’s cheaper – they will have a second, as opposed to childless women deciding to have their first child due to the effects of the reform. Highly-educated women are also having their first children 4.8 months earlier, on average, which is correlated with a greater number of children overall.

Overall, these findings provide strong support for a discontinuous increase in overall fertility as a result of the reform, resulting in strong effects on fertility for women with higher earnings and educational attainment. The observed baby gap between highly-educated and lesser-educated women therefore seems to be narrowing.

Interestingly, the 2007 reform also increased paternity acknowledgement, in which unmarried fathers can opt to legally register as the child’s father, with all of the attached rights and obligations. In Germany, paternity acknowledgement is strongly associated with better outcomes for children.

Professor Raute hypothesizes two possible explanations for why the 2007 reform increased parental acknowledgement. It could be that as benefits to mothers increase, fathers have to contribute less to support the household, and therefore paternal acknowledgement is cheaper (the “cost channel”). Alternatively, the reform reserved two months of paid leave for fathers, which may have encouraged paternity acknowledgement (the “paternity leave channel”).

Looking at children born in the first few months of the reform, whose parents couldn’t have known about the new reform when they were conceived, paternity acknowledgement increased by 1.5 percentage points. However, this effect was driven primarily by women who were working prior to giving birth, who were entitled to a larger share of benefits under the reform. This effect implies that the cost channel, rather than the paternity leave channel, is responsible for the increase in paternity acknowledgement post-reform.

Monday, March 13, 2017

Barriers to Female Leadership: Does Race Matter? with Laurie Rudman

Despite making major strides toward gender equality, gender stereotype violations are still taboo. Women who display traits inconsistent with feminine gender role prescriptions are at risk for social and economic backlash, “penalties” for behaving out of social bounds. This week’s WAPPP seminar featured Laurie Rudman, Professor of Psychology at Rutgers University, as she presented studies on backlash to women’s leadership, how race affects backlash, and how the psychology of backlash affected the 2016 presidential election.

The risk of backlash creates a double bind for women leaders. In order to prove their competence, aspiring leaders can show agency, ambition, or assertiveness, all traits associated with stereotypical leaders who have historically been men. This strategy is effective for demonstrating fitness for a leadership role, but when women do it they face social disapproval for transgressing feminine gender roles: women therefore have to jump over two key hurdles to get to leadership positions.

Much of the psychological research on backlash uses the example of job applicants: study participants are exposed to male and female job applicants who are either agentic (self-promoting, confident, assertive) or communal (modest, oriented toward others). Only the gender of the applicant is varied: all communal applicants and all agentic applicants use the same script. Respondents are asked to rate these applicants on their competence, likability, and hireability. Professor Rudman presented a mini-meta analysis of eight of her backlash studies that follow this same paradigm.

When comparing male and female communal applicants, respondents rate them as equally likeable. However, they tend to rate male communal applicants as more competent and therefore more hirable than women. Interestingly, agentic women tend to be rated slightly more competent than agentic men. However, agentic women are rated as far less likeable than agentic men, and therefore are not hired. This paradigm, according to Professor Rudman, perfectly illustrates the double bind: when women exhibit stereotypically “female” traits, they are viewed as incompetent; take on traditionally “male” traits that are associated with leadership, and they are unlikable and unhirable.

This paradigm of backlash and double-bind may help us understand the result of the 2016 presidential election. According to Professor Rudman, ambitious and competent women provoke backlash because they threaten the legitimacy of patriarchy. As more women are seen performing at the highest levels, it becomes less tenable for society to grant men preferential access to power and privilege. Backlash, therefore, functions to keep women out of the highest levels of leadership, render them invisible, and support patriarchy. The vitriol leveled toward Hillary Clinton throughout her career perfectly encapsulates the backlash effect.

What motivates this level of animosity? Men and women who defend traditional gender roles and power differentials are more likely to engage in backlash against agentic female leaders. However, this leaves a vital question: What is it about patriarchy that people deem worthy of defense? Professor Rudman suggested a few possible sources of support. Defenders of patriarchy may exhibit social dominance orientation (SDO), a sense that hierarchies are a good thing and that some groups deserve to be at the top, and others at the bottom. Alternatively, it could be gender essentialism, the belief that biological differences between men and women imply hierarchy. Finally, Professor Rudman suggested social Darwinism. Adherents of social Darwinism believe that humans are governed by survival of the fittest and that social hierarchies justify ruthlessness to achieve success. Social Darwinism has been used to support white supremacy, colonialism, and eugenics, and anthropologists have been quick to note that humans are driven far more by culture than by genes. Still, social Darwinism lives on in the collective consciousness, particularly in the literature on business ethics, but has rarely been studied in psychology.

With these possibilities in mind, Professor Rudman conducted a study of 433 American adults, asking whether they had preferred Trump or Clinton in the 2016 election. The results showed 60% favoring Clinton to 40% Trump, driven mostly by women’s votes. After adjusting for demographic factors, political identification and support for patriarchy were the only variables that predicted favoring Trump over Clinton. This confirms what we already know – people who support patriarchy reject female leaders – but it doesn’t explain why. Professor Rudman separately regressed defending patriarchy on SDO, gender essentialism, and social Darwinism and found that support for social Darwinism contributes about twice as much variance to defending patriarchy (16%) as SDO (8%) and gender essentialism (7%). This result replicated directly in a study of 387 Rutgers undergraduates: social Darwinism predicts defending patriarchy, which predicts favoring Trump over Clinton.

Professor Rudman and her colleagues delved further into gender essentialism, working with a scenario that centers reproductive biology in a study on backlash. Study participants received a paragraph about Susan and her husband, both high-powered business leaders who love their jobs. The end of the paragraph either read “Susan has never wanted to be a mother, and the couple has decided to be child-free by choice. Susan wants her husband to get a vasectomy, and he has agreed” or “Susan has always wanted to be a mother, so the couple has decided to start a family. Susan has asked her husband to reverse his vasectomy, and he has agreed.” Participants were asked how much they support Susan’s lifestyle, trust her decision making, and how morally justified they believe her lifestyle to be. Participants who scored higher on defending patriarchy demonstrated low support for Susan in the first condition, but not in the second condition. Just as in the last study, support for social Darwinism was the greatest contributor to this effect, above SDO and gender essentialism. These studies emphasize that social Darwinism – the belief that some are destined to dominate and others to be dominated – is a critical force in understanding defense of patriarchy and backlash against agentic women. The study of Susan demonstrates that this effect even holds outside of the political context.

What role does race have on backlash against agentic women? Black women are often stereotyped as more androgynous or masculine than white women, and therefore may have less difficulty asserting their competence by demonstrating “male” traits. Alternatively, they may face double jeopardy of having to combat both racial and gender stereotypes, placing even more hurdles on the path to leadership. Psychological studies of race can prove challenging, Professor Rudman said, because white respondents have an intense fear of being perceived as bigoted, and therefore overcompensate in their answers to reveal a pro-black bias. In the job applicant example, black women get top marks on competence, likability, and hirability, whether they are depicted as agentic or communal.

Professor Rudman and her colleagues turned to a new paradigm in which respondents were told that they were choosing actors for a role as lab managers, thereby allowing all actors to use the same agentic script. In one condition, respondents saw a white man and a white woman, and in the other respondents saw a white man and a black woman. Again, participants were asked to rate the actors based on competence, likability, and hirability. In the first condition, respondents rated the white man and white woman as equally competent, but found the man much more likable than the woman and were more likely to hire him. In the second condition, respondents rated the black woman more likable than the white man, but found the white man far more competent and were more likely to hire him. While all women were at a disadvantage for hiring, for white women this result was based on likability, while for black women it was based on competence. This result is consistent with double jeopardy, that black women face a higher first hurdle than white women to prove their fitness for leadership positions. What it takes to surmount this obstacle is a pressing concern for future intersectional research.

Monday, February 27, 2017

Why Are Women Underrepresented as Leaders? Two Ideas from Recent Psychological Research with Francesca Gino

Gender inequality in top leadership positions persists across a range of fields. At a high level, research projects in economics, psychology, and management that have tried to explain persistent gender inequality have fallen into two buckets. The first emphasizes “demand-side factors,” such as how gender stereotypes about men and women comport or conflict with our perceptions of leaders. The second emphasizes “supply-side factors,” examining differences in men and women’s behavior when it comes to reaching high-power positions. According to this line of research, men may demonstrate more behaviors associated with professional advancement, including dominance, confidence, and competitiveness, than women. This week’s WAPPP seminar features Francesca Gino, Tandon Family Professor of Business Administration at Harvard Business School. Professor Gino and her colleagues study an additional strand of explanation closer to supply-side factors, namely gender differences in preferences. It may be that men and women have different preferences when it comes to achieving high-level positions.

The types of goals that we set out for ourselves have a big impact on our lives and our work. Professor Gino and her colleagues hypothesize that there may be a difference in the way men and women think about life goals more generally. While it’s very likely that our environment and sociocultural factors influence the types of goals that men and women have, these studies bracket those considerations and engage only with life goals as expressed by men and women. Professor Gino hypothesizes that women will have a larger number of life goals than men, likely across a wider range of roles in their lives. The second hypothesis is that in examining these goals, a smaller percentage of women’s goals will be associated with power as compared to men. These hypotheses are built on and consistent with literature that indicates that women are more motivated by relationships and men are more oriented toward achievement and power. Professor Gino noted at the outset that other audiences have responded angrily to portions of this talk, but urged us to look at the data and to remember that these findings are descriptive rather than normative.

If these hypotheses are correct, what are the implications for women and men’s desire to reach high-level positions? If women do have more life goals, and a smaller percentage are related to power, this may have implications for how women view professional advancement. Professor Gino and her colleagues expected that both men and women would be able to see the positive aspects associated with high-power positions, but that women would be more aware of and focused on the negative aspects associated with high-power positions than men. If women have more life goals that they care about, the logic goes, they will be more likely to see conflicts between their various goals and roles, and will likely see the need to make tradeoffs. Men and women, therefore, would see high-power positions as equally attainable, but women would see them as less desirable.

The first study of these hypotheses sampled 781 working adults and asked them to list their core life goals, up to 25 goals, within two minutes. Once each participant had listed their goals, they were asked to sort them into different categories based on existing research, such as power, affiliation, and personal growth. Research assistants looked over these categorizations to ensure that each goal was coded accurately. While the difference is not major, there is a gender difference in terms of listing goals, with men listing fewer compared to women. Similarly, this study produced the expected difference in terms of goals related to power, with a greater percentage of men’s goals related to power than women’s.

To control for concerns that women may have an advantage in thinking of and articulating their life goals under time pressure, the researchers conducted a second study that capped the number of life goals at 20 and asked participants to write down all of their favorite foods, up to 20, as a comparison task. The second study replicated the results of the first, with women listing a greater number of goals than men, but a smaller percentage of those goals were associated with power. These results obtain whether respondents list their own goals, pick their goals from a pre-written list, or are given a list and asked to reject goals that aren’t important to them. These findings therefore appear to be pretty robust.

Professor Gino then turned to the second question, whether men and women have different views of the positive and negative consequences of career advancement. In particular, this research asks whether women focus on conflict with other life goals in a way that makes them less interested in achieving high-level positions. Professor Gino and her colleagues sampled 635 Harvard Business School graduates and showed them a picture of a ladder representing professional advancement in their industry. Respondents were asked to indicate their current position on the ladder, what their ideal position would be, and their highest attainable position using the rungs on the ladder. The researchers found no difference in current position between men and women, but found the expected difference in ideal position. For men, their ideal position was higher on the ladder than women’s ideal position. However, when it comes to the highest attainable position, again there is no gender difference. Professor Gino describes this result as women saying “we can get there, it’s just not ideal for us.”

Why might we see this difference? Professor Gino and her colleagues anticipate that women see more negative aspects of professional advancement compared to men, despite seeing all the same positive aspects. In a companion study, respondents were asked to imagine that they had the opportunity for a promotion at work and to indicate on a scale from 1-7 their expectations of experiencing certain negative consequences, such as anxiety, stress, time pressure, and conflict, as well as certain positive consequences, such as happiness, job satisfaction, opportunity, money, and influence. The results tend in the expected direction – there is no statistically significant difference between men and women in terms of expected positive outcomes, but women report a greater likelihood of experiencing negative outcomes, especially conflict with other life goals. In this study, the researchers also asked whether respondents thought position was attainable and to what extent it was desirable. Again, women saw promotion to a higher-level position as attainable, but not necessarily desirable, and reported that they were less likely to accept the promotion.

These same results replicated across HBS alumni, executive education participants, undergraduate students, and working adults. While the data is descriptive and not prescriptive, there are all sorts of additional aspects to study. In terms of positive and negative expectations, women may be correct about the potential conflict and tradeoffs while men underestimate potential downsides of advancement. Alternatively, women may overestimate these costs. (It may also be that women accurately estimate the downsides of career advancement, knowing that they will have to shoulder much of the burden of conflict with other life goals!) Further, the study of undergraduate students implicates societal expectations in terms of life goals and institutional timelines for career advancement that may conflict with other roles and goals. One related study notes that there are significant gender differences in thinking about the future and that women have a much longer time horizon—whereas “long-term” is a period of years, for men “long-term” is measured in months. We look forward to more research to explore these complications further.

Tuesday, February 21, 2017

Climbing the Ladder: Gender and Careers in Public Service with Amy E. Smith

Much of the research on gender inequality in senior management positions focuses on the private sector and why women don’t ascend to these positions. What are we missing by not considering the public sector or the characteristics of women who do reach the upper echelons? This week’s WAPPP seminar feature Amy E. Smith, Associate Professor of Public Policy and Public Affairs at the McCormack Graduate School of Policy and Global Studies at University of Massachusetts Boston. Professor Smith presented findings from her research collaboration’s work on Climbing the Ladder: Gender and Careers in Public Service.

Background and Motivation

Social equality and representation are important values in the public sector. We believe both that public sector jobs should be equally accessible to everyone and that those who work in the public sector should look like the people they serve across a variety of demographic characteristics. If bureaucrats reflect the diversity of the populations they serve, the logic goes, a variety of interests will be represented in the decision-making process. Representation also has symbolic power – citizens are more likely to feel that they have been heard, are more likely to cooperate with government, and are more likely to feel that the government is accessible if government officials look like them.

However, there is still a significant lack of gender diversity in leadership positions. There have been a number of reasons posited for this discrepancy, including male advantages in accessing, accumulating, and invoking human and social capital, divergences between our gender stereotypes and conceptions of what leaders should be, and familial expectations and work-life conflict. However, as noted, these mechanisms explain why women don’t make it to senior leadership roles, rather than illuminating what helps women achieve these positions. We have limited information about career paths into public sector leadership for both men and women. Once we have this information, we may be better able to design workplace policies to promote gender equality.

Research Findings

Professor Smith’s research focuses on two key questions: what do career paths look like for those who have achieved high-level leadership positions in public sector organizations? And how do men and women who are in these positions express their qualifications?

This research focuses on U.S. federal regulatory organizations, like the FDA and SEC, partially because these organizations have broad power and because there are a significant proportion of women in high-ranking positions. At the time of this study, 36% of senior leadership roles in these organizations were filled by women, compared to 18% of Congressional seats, and 15% of corporate boards. Professor Smith and her collaborators selected the 12 major federal regulatory agencies and identified all top-level leaders for the period from 1983 to 2013, a sample of 89 individuals. Of these 89, they were able to collect career path data for 83 individuals, 61 men and 22 women. The researchers established complete career histories for each person from the time they graduated from college to 2013. For each year, the researchers coded whether the individual worked for a federal agency, a private sector organization, and law firm, or “other,” including nonprofit organizations or other levels of government.

Descriptively, the women in the sample tended to spend less time in each organization, worked at fewer organizations overall, had fewer children, tended to work in newer and larger regulatory organizations, and tended to work for organizations that were responsible for implementing more legislation and engaging in more rulemaking.

Professor Smith and her colleagues looked at career patterns using a sequence analysis of the career histories to generate clusters with similar characteristics. Women in the sample clustered into three career patterns. The first group, which Professor Smith calls “public servants,” was characterized by work in federal agencies and the “other” category of nonprofit and government work. The second group was the “sector hoppers,” characterized by movement back and forth between private sector organizations and federal regulatory agencies. The third group, the attorneys, all worked in law firms at some point in their careers.

For men in the sample, Professor Smith identified four career paths. The “movers,” the largest group, showed a pattern of moving between organizational types. The “sector hoppers,” by contrast, moved only between private sector and federal regulatory organizations. The third group, the “public sector attorneys,” worked predominantly in federal agencies, as compared to the “private sector attorneys” who tended to practice in law firms. The key takeaway from the career pattern analysis is that men, more so than women, seem to develop their career paths by moving across sectors and organizations.

The second key research question asks: how do men and women establish and express legitimacy for leadership positions? Many of the characteristics we associate with leaders are incompatible with our stereotypes about women – where leaders are decisive and aggressive, we expect women to be kind and collaborative. As such, women may engage in extra efforts to signal an appropriate leadership identity. Professor Smith and her collaborators collected the Senate confirmation hearing transcripts for 67 of the 83 individuals in the sample and examined both their self-narratives – the stories each individual told about themselves and their qualifications – as well as their interactions with committee members. While coding the transcripts is still a work in progress, Professor Smith has identified three key mechanisms for claiming legitimacy: proving, selling, and challenging.

When nominees read their personal statements in front of the committee, they are engaging in proving:  by narrating their experiences and talking about their personal histories, nominees create a unique identity and position themselves as leaders. Female nominees in the examined transcripts tended to be backward-looking in their proving, discussing their past experiences and establishing themselves as public servants. By contrast, male nominees tend to be a bit more forward-looking in their proving. It may be that male nominees were already considered qualified, and therefore felt more comfortable discussing their future plans for the organization rather than discussing their past experiences.

Selling is characterized by a third party talking about the nominee, largely through introductions and endorsements. Selling behaviors directed toward female nominees tended to list and repeat the nominee’s past experience to lend her credibility and gain approval from the committee. Interestingly, for male nominees there was very little selling. Male nominees’ prior qualifications appear to be almost assumed, whereas female nominees’ qualifications must be reiterated to truly sink in.

Finally, challenging provides the greatest opportunity to observe nominees’ interactions with committee members. Questions directed at female nominees focused repeatedly on technical expertise and management challenges associated with leading the agency. Male nominees generally did not get these sorts of questions, as if, Professor Smith emphasized, these competencies appear to be assumed. Instead, male nominees were often asked forward-looking questions about how to handle emerging issues, and many were asked non-questions.

Considering the two research questions together, we see that both men and women are accumulating social and human capital, but that women tend to accumulate social capital through strong ties and dense networks and human capital that is narrow and specialized, as evidenced by the “public servant” career pattern. Men tended to show more weak ties, sparse networks, and more varied human capital. While both men and women engage in narrative identity work to express their qualifications, women face a gendered twist. Their senior leadership roles and the experiences that got them there violate gendered expectations of what a leader looks like. However, these women’s expression of their qualifications seems to fall back in line with female stereotypes, as they look backwards and repeat their relevant experiences to prove their legitimacy.

Directions for Future Research

These early results are an exciting starting point for more research in this area. Now that we know something about career patterns and claiming legitimacy, qualitative follow-up work may illuminate why career patterns differ based on gender and what other factors have influenced pivotal career choices.

Sunday, February 5, 2017

Estimating Income Inequality from Binned Incomes with Paul von Hippel

Starting this year, many employers will be required to report to the Equal Employment Opportunity Commission (EEOC) their employees’ pay by sex, race, and ethnicity within 12 specified pay bins. This reporting will help the EEOC improve enforcement of pay discrimination laws and may provide some insight into the persistence of wage gaps. This week’s WAPPP seminar featured Paul von Hippel, Assistant Professor of Public Affairs at the Lyndon B. Johnson School of Public Affairs, University of Texas at Austin. While many methods have been used to analyze binned incomes, little work has been done to evaluate these methods. Professor von Hippel described three statistical methods for analyzing binned data and their relative accuracy in estimating underlying income differences.

According to Professor von Hippel, there are some misunderstandings about the limitations of binned date. The general impression is that because pay bins can be $10,000-$15,000 wide, it is impossible to estimate pay differences that are smaller than the bin width. While it is difficult to accurately measure the difference in individual pay within one pay band, it is possible to discern average or median pay differences with much greater precision. Even with a bin width of $10,000, it is possible to estimate pay differences within $1,500. Despite the assumption to the contrary, bin width is actually not an obstacle to this sort of analysis.

Depending upon the desired estimate, be it average income, median income, or an index of inequality like the Gini coefficient, certain types of statistical analysis will be more precise than others. Using Census data of binned incomes and statistics on underlying non-binned income, Professor von Hippel described three statistical methods to see how close each method comes, using the binned data, to estimating the underlying non-binned data.

Robust Pareto Midpoint Estimator (RPME): This method, the simplest, sets each household income to the midpoint of its bin. While it is not the most sophisticated method, it works about as well as more complex analyses, particularly if the bins aren’t too wide. As the number of bins increases, the estimates get better and better. The only “trouble spot” with this type of analysis is the top income bin, which doesn’t have an upper bound. To solve this issue, this method estimates a Pareto distribution that fits the top two income bins and plugs in the mean of that distribution for households within those bins. There are some issues with the traditional formula when there are a large number of high-income households, but using a harmonic mean tends to resolve this difficulty. This method is very quick and can run on thousands of employers within a minute or so. The downside of this method is that it’s unrealistic to assume that every household within a given pay bin has the same pay value, and the analysis may lose something by treating each household the same.

Multi-Model Generalized Beta Estimator (MGBE): This method involves fitting continuous distributions to the given income distribution. In looking at county-level Census data, Professor von Hippel set each of 10 different continuous distributions to the income distribution for a county, took the distribution that best fit that county’s data, and then used those distributions to estimate average income, median income, and the Gini coefficient. One positive aspect of this approach is that it treats incomes as continuous, not discrete. However, on the negative side, even the best-fitting distribution may not fit that well. This is particularly true if income is bimodal.

Spline CDF Estimator: This method uses nonparametric bin smoothing to spread incomes evenly across bins. A simple step function works nicely, but the method works even better if the bins are divided recursively or a cubic spline is fit to smooth over the step function to model the distribution of incomes. Professor von Hippel credits David Hunter and McKalie Drown for their work on this method, which combines the best aspects of the other two methods: the Spline CDF Estimator models income as continuous and perfectly reproduces bin counts.

Of these three techniques, the Spline CDF Estimator is the most accurate. Between the other two, RPME works about as well as MGBE for some estimates and is much faster, particularly when estimating average income. However, it is not as accurate for median income, and estimating inequality indices is even more difficult. There are still some inaccuracies with these methods, particularly when trying to estimate trends in inequality over time, but this analysis is good news for researchers studying wage gaps. With the binned data soon to be available from the EEOC, it will be possible to estimate income differences much more precisely than the bins would seem to indicate – and with good data comes good policy! RPME and MGBE are available in both Stata and in R’s inequality package, and the Spline CDF Estimator is available in R’s binsmooth package.

Sunday, January 29, 2017

Linking Non-Cognitive Skills and Educational Achievement to Girls in Developing Societies: The Case of Ghana with Sally Nuamah

Sixty-two million girls are school-aged but not in school. We know that girls’ education has positive impacts, not just for girls themselves but for their communities: educating girls is associated with decreased mortality and incidence HIV/AIDS and with increased economic growth. Non-cognitive skills – attitudes, attributes, and personal skills apart from aptitude that individuals can draw on to achieve success – can have important impacts on improving educational outcomes. “Grit” is the paradigm example: perseverance towards one’s goals may be just as important to academic achievement as aptitude. While there is evidence that non-cognitive skills shape academic achievement, it is less clear how these skills are transmitted, and in particular what role schools play in transmitting these skills. Further, much of the research on non-cognitive skills has been done on elite male students in a U.S. context, which may not be entirely generalizable to other settings.

Our first WAPPP seminar of the spring semester featured Sally Nuamah, WAPPP Fellow and Joint Postdoctoral Fellow, University Center for Human Values and Center for Study of Democratic Politics, Woodrow Wilson School, Princeton University.  Dr. Nuamah presented the results of a study on non-cognitive skills and educational achievement focusing on 37 girls in Ghana striving to be the first in their families to go to college. Dr. Nuamah’s research focused on three key questions: What challenges do girls face? What does it take for them to achieve? And how do schools contribute to their achievement?

The girls in the study faced three levels of obstacles to educational achievement: their low socioeconomic status, under-resourced school, and particular gendered challenges, including risk of pregnancy that led many students to drop out of school. Schools have an important role to play in mediating the negative effects of this sociocultural environment. Dr. Nuamah found that the school in her study facilitated “achievement-oriented identities,” positive beliefs about students’ own abilities to succeed and to translate those beliefs into realizable actions. The school emphasized both self-efficacy – impressing upon students that they have the ability to overcome challenges – and strategy – helping students to create, implement, and monitor plans to overcome challenges. This achievement-oriented identity was particularly affirmed at the school leadership level, in after-school programs, and in the religion and morality curriculum.

School leadership: At the time of the study, the school had its first female headmistress. She initially perceived the female students to be timid and took policy steps to change that. Every year, the school held a speech competition at which only male students had delivered the keynote. This year, the headmistress required that a female student give the keynote. This small change had a big impact – the girl chosen to deliver the speech said that it increased her confidence, and “I feel like there’s nothing I can’t do.”

After-school: There is a great deal of research on the benefits of after-school groups: in particular, these groups create social support systems among peer groups. In Dr. Nuamah’s descriptive survey, girls reported an additional 2-5 more hours of housework per day than their male peers, with schedules that allowed for only 4-5 hours of sleep per night. Discipline and time management are critical for these girls, and these values are reinforced in their peer groups.

Curriculum: Dr. Nuamah emphasized the importance of religious and moral education in the Ghanaian context. Formal education in Ghana was historically closely tied to Christian missionaries, and schools’ practices reflect this history, including morning worship and daily prayer. In particular, rhetoric about achievement remains entwined with religion. Students are told to believe in themselves and their God-given gifts. This appeal to faith, even for students who aren’t particularly religious, engenders greater confidence in their ability to overcome challenges like the cost of education.

In conversations with students who had graduated, those seeking to go to college perfectly encapsulated the achievement-oriented identity—having faith and taking positive steps to achieve their goals. One student who had been accepted to university but couldn’t afford the fees voiced her anxiety, but said worrying wouldn’t solve her problem. She just had to pray to God… and she had applied for several scholarships.

Dr. Nuamah’s work highlights how school context can contribute to female students’ achievement, and particularly how schools can help girls grapple with gender-specific challenges, rather than assuming that the sole impediment to achievement is poverty. We look forward to learning more about this exciting area of research!

Monday, December 5, 2016

On Her Account: Can Strengthening Women’s Financial Control Boost Female Labor Supply? With Simone Schaner

As financial inclusion and FinTech have taken on greater prominence, governments must grapple with how to best enable women’s economic empowerment. This week’s WAPPP seminar featured Simone Schaner, Assistant Professor of Economics at Dartmouth, as she presented the results of a randomized controlled trial to assess how financial inclusion coupled with targeted benefit payments impact women's labor force participation and economic welfare in India.

Professor Schaner began with a central question: Why aren’t women in emerging economies participating in the labor force? Female labor force participation has been basically stagnant despite sustained economic growth in India. However, 34% of rural non-working women say that they would like to work, and employing these women would increase female labor force participation by 80%. What is keeping them out of the formal labor force?

When we think about labor force participation, we often think about demand-side constraints – are there jobs available for those who want them? However, in this case supply-side constraints may be especially important. Women face strong gender norms and limited household bargaining power that curtails their ability to participate in the labor force. Economists think of these social constraints within a utility model: individuals may experience a utility loss if they violate a gendered behavioral norm that is upheld by the community. In the Indian context, if a woman works, it may signal that her husband has failed as a breadwinner. Even if women want to participate in the labor force, this threat of utility loss may keep them out. Data from the World Values Survey demonstrates that female labor force participation correlates with men’s and women’s attitudes toward female work. Where both men and women are supportive of working women, we see greater female labor force participation; as the gap between male and female attitude increases, female labor force participation decreases.

This particular research project focuses on poor, married couples in India who are potential beneficiaries of the public workfare program NREGS. The community exhibits strong norms against female work and mobility—only 38% of women report having gone to village market by themselves in last year. NREGS guarantees every rural Indian household 100 days of paid work at a fixed minimum wage facilitated by the local government. When these women participate in the NREGS workfare program, their wages are paid into their husbands via bank transfers. This study investigates whether strengthening women’s control of NREGS wages can increase female participation in the NREGS program and in the labor force more broadly.

STUDY DESIGN

Women in the field experiment were divided into five groups with two “flavors” of financial inclusion.  In the “Accounts Basic” group, the study team opened low-cost, no-frills bank accounts at community banking kiosks. After their paperwork was processed, the women in this group were taken back to the kiosks to demonstrate deposits and withdrawals. In the “Accounts Plus” group, the women also received a group-based training session that emphasized what a bank account is and what can be done with it (receiving benefits transfers like NREGS, the importance of saving, and how money kept in a bank account is safe). In two additional groups “Accounts Basic Linking” and “Accounts Plus Linking,” the women received the same services described above, but their accounts were configured such that their NREGS wages were paid directly into their accounts, rather than their husbands’. The fifth group, a control, received no financial inclusion services or training. This design allowed the research team to examine how control over NREGS wages impacts female labor force participation while holding financial inclusion (including access to banking services) constant.

MAIN RESULTS

Initial survey data revealed that women in the study had opened accounts, but rarely used them. In the Accounts Basic group, 17% of women had been to the bank in the last six months, compared to 10% in the control group. While this figure was somewhat higher in the Accounts Plus and the Accounts Plus Linking groups, these accounts were only used occasionally. However, this intervention had a major impact on women’s bank balances. For women who received NREGS payments, they received an average of $61 – 26% of a woman’s non-NREGS average annual income. While it’s not clear that this additional income is sufficient to change household bargaining power, the intervention certainly increased women’s control of assets. Women in the Accounts Plus Linking group also increased their labor force participation – they did more work in the NREGS program and also did more work in the private market.

MECHANISMS

One possible mechanism for this shift is that the intervention increased a woman’s effective NREGS wages – while the official wage didn’t change, their increased control over their wages may have made NREGS work more attractive. However, if this were the case, we wouldn’t expect to see an increase in private sector work as well; NREGS work would have been more attractive at the expense of private sector work paid in cash. Similarly, when women’s bargaining power increases, economic models say that they will consume in terms of consumption and leisure, so we wouldn’t see the increase in both NREGS work and private labor. However, this standard model completely ignores the importance of norms – specifically here, the male preference that their wives don’t work. If men hold these preferences and yet women’s bargaining power increases, then we would expect to see this across-the-board increase in female labor force participation. Indeed, these effects are stronger for women who were constrained (not working) before the study began.

CONCLUSIONS

Strengthening women’s control over government workfare benefits increases participation in workfare and increases work on the private market. There is some evidence of increased female mobility and no evidence of male backlash in terms of reduced decision-making power, gender-based violence, or negatively impacted mental health. The broader implication of this study is that the impacts of female empowerment on female labor force participation may vary depending upon the extent to which men and women internalize gender norms and social constraints. The study team is planning a richer data collection to come, and we look forward to hearing additional results!