Mihaela Pintea, associate professor of economics, recently published “Dynamics of female labor force participation and welfare with multiple social reference groups,” which looks at the relationship between female labor force participation, the gender wage gap and happiness.
Pintea has been interested in economics from a young age. Growing up in Communist Romania, her mother was a chemical engineer and her father was a physicist; so she had no fear of math or science and attended a high school that focused on computer science. The fall of the Berlin Wall occurred when she was 14 years old, and she witnessed firsthand the effect of the revolution that lead to the fall of the communist system and of the centrally planned economy.
“I was curious as to how a different way of organizing an economy could lead to growth,” she says. That curiosity led her to a Ph.D. in economics in the United States and a position at FIU after graduation, where she has been a Panther since 2003.
Pintea’s main area of research is economic growth and development, and the paper’s topic is a little different from her usual interests. The idea for the paper began a decade ago, after Pintea gave birth to her first daughter. She was on tenure-track, and even though continuing her career was never in doubt, she began thinking about factors that affect women’s choice of staying at home or re-entering the workforce after beginning a family.
She was already familiar with research that showed women’s happiness has declined both absolutely and relative to men in recent decades, even though female labor participation has increased dramatically and by most objective standards, the quality of their life has improved. She decided to investigate how different economic factors shaped female labor participation, the type of jobs that women engage in, gender wage gap and women’s happiness.
Her paper’s focus is on married women who can choose between staying at home or being part of the labor force. Due to cultural norms and personal preferences, women vary in their valuation of the ability to stay at home, and that happiness is affected by status concerns, or what is commonly referred as “keeping up with the Joneses.”
Status concerns are also impacted by the relationship individuals have with market and home goods. Market goods are things that can be purchased, such as cars or jewelry, and home goods are things pertaining to the home, such as prepared food, cleaning and childcare. Home goods can also be market goods – for example, one can hire a nanny. Pintea argues that women have different degrees to which they are willing to acquire home goods from the market, and that women who are more likely to join the labor force are those who suffer less from outsourcing these tasks. The price of these home goods and the wage that women can receive also affect whether women join the labor force.
Additionally, individuals will compare themselves with other individuals. Households where the women work have a higher overall income, but women’s salaries are on average lower than men’s salaries. Women who work experience increased welfare because of the income that they receive, and increased status of their household. However, they are also subject to decreases in welfare, because they must outsource their home production and compete with the men that are already in the workforce. These relative status concerns are the mechanism that can explain how increases in women’s labor participation and wages can affect women’s happiness in a negative fashion.
As more women join the labor force, the gender wage gap decreases. If there are very few women who stay in the labor force after they have a family, either by choice or because they are fired once they become pregnant (which was often the case in professional settings before the Pregnancy Discrimination Act of 1978), firms are very unlikely to invest in professional development and training for women. This in turn leads to the existence of wage gaps, which further discourages female participation and dynamically reinforces the mechanism that associates low participation and high gender wage gaps. Today, much of the cultural stigma about pregnancy in the workforce has been removed, and women are both more likely to stay working and to receive training.
However, due to historical employment patterns women are likely to be concentrated in occupations that have been historically “female,” such as teaching, and which pay less than traditionally “male” professions such as law or accounting. It is still difficult for women to enter male-dominated professions due to the importance of networking and mentorship. These effects provide a plausible explanation for why women have not entered occupations in a proportional manner, and why the gender wage gap is more persistent than aggregate models would predict.
If part-time work is available to women, overall female labor force participation increases, but some women that would have worked full-time end up working part-time. The possibility of part-time jobs can facilitate the labor force entry of less career-oriented women, but it could also encourage women who would otherwise have a stronger labor force commitment to take part-time jobs. Policies that would encourage women to take part-time positions in the hope that they are retained in the labor force might have unintended negative impact on women’s access to training, full-time positions and overall welfare.
Thus, some policies designed to increase female participation do not necessarily lead to an increase in the working women’s welfare in the short term. An increase in female happiness along with an increase in female participation can come from a more comprehensive set of policies that involve men’s more active participation in the household, along with cultural shifts in how society values men and women’s contribution to both the home and work.
Pintea acknowledges the difficulty of such widespread change. However, she says, “as a macroeconomist, I look at aggregate trends. Change is happening in that direction now. We are making it more financially rewarding for women to enter the workforce, and we are slowly eroding the norms that prevent them from doing it.”