The recent World Cup success of the US women’s national soccer team was swiftly followed by calls for equal pay, and a reminder of the gender discrimination lawsuit that has been filed by the players against the sport’s national governing body, US Soccer. We invited our US panel to express their views on the economics behind this controversy.
We also widened the focus to the gender pay gap across the whole economy, following the proposal by Democratic presidential candidate Kamala Harris that companies should be required to show that they are paying men and women equally – and if unable to do so, be liable to a fine based on their profits. Another candidate, Elizabeth Warren, has also made policy proposals on equal pay.
We asked the experts whether they agreed or disagreed with the following statements, and, if so, how strongly and with what degree of confidence:
(a) In a case like the US women’s national soccer team where the revenues that they generate and their on-field performance both exceed those of the men’s team, there is no justification for lower pay.
(b) Fining companies above a certain size that fail to provide the same remuneration to men and women employees performing comparable roles would be an effective way of closing the gender pay gap.
The US women’s national soccer team
Of our 43 experts, 42 participated in this survey, three of whom voted ‘no opinion’ on both statements. Of the 39 who did express an opinion and weighted by each expert’s confidence in their response, 48% strongly agreed with the first statement, 46% agreed, 2% were uncertain, and 4% disagreed.
Among the short comments that the experts are able to include when they participate in the survey, Eric Maskin at Harvard replied: ‘If the women’s team really does generate more revenues, then, yes, paying them less seems unjustified.’ Darrell Duffie at Stanford said: ‘Seems like equal pay for (at least) equal work, in the same job, should require no additional explanation!’ And David Autor at MIT commented: ‘There’s no simple market price for talent. But I don’t see why women’s team shouldn’t get same share of rents as men’s team.’
While Michael Greenstone at Chicago agreed that: ‘Revenue and on-field performance are compelling output measures for national soccer teams’, other respondents pointed to additional potential determinants of relative pay, as well as questioning whether the women’s team are really earning less than the men.
Oliver Hart at Harvard noted that: ‘Of course, one can provide a justification: maybe their outside options are different. But it is not smart policy by US Soccer.’ Steven Kaplan at Chicago added: ‘Depends on contract. If both have all variable or all fixed pay, yes. If women’s contract is fixed, risk premium could pay men more.’ And Joseph Altonji at Yale pointed out that: ‘Gender differences in total World Cup revenue and in opportunities in professional soccer also affect pay.’
Larry Samuelson at Yale took the view that: ‘It’s a normative judgment, but commonly accepted standards for evaluating pay do not justify a differential.’ Robert Hall at Stanford was less convinced: ‘Justification is not a relevant concept in the economics of wage determination. Wages depend on a variety of forces, some bad and some OK.’ And while he strongly agreed with the statement, Angus Deaton at Princeton concluded: ‘Those are my values. This is not a question about economics.’
Closing the gender pay gap
Opinions on the second statement about policies to close the gender pay gap were far more divided with a substantial degree of uncertainty. Weighted by each expert’s confidence in their response, 28% agreed, 46% were uncertain, 17% disagreed and 9% strongly disagreed.
Among those who agreed that the threat of fines could encourage companies to close the gender pay gap, Bengt Holmström at MIT said: ‘It may take several design rounds. The goal is to change the mindset and attitudes. Some form of collective pressure is needed.’ His MIT colleague Richard Schmalensee was more cautious: ‘Sounds like a sensible plan, but administrative problems may turn out to be serious.’
Other panelists were similarly concerned about implementation. Caroline Hoxby at Stanford remarked: ‘The principle would be very hard to implement in relatively free labor markets. Define comparable outside of bureaucracies: near impossible.’ The challenge of defining comparable roles performed by men and women employees was echoed in other comments.
Kenneth Judd at Stanford replied: ‘Define “comparable roles”. If two jobs perform the same task, but one offers much more flexibility in hours, then a wage difference is fine.’ Christopher Udry at Northwestern added: ‘Defining comparable seems difficult. And wouldn’t address most of the gender gap, which is across, not within, task.’ And Anil Kashyap at Chicago noted that: ‘Comparable is so tricky, for instance, how do we adjust for experience, careers interruptions, etc?’, drawing attention to research evidence on the gender gap among young professionals in financial and corporate careers.
Maurice Obstfeld at Berkeley also queried ‘comparable roles’, and raised the issue of potential unintended consequences: ‘Devil is in the details – define ‘comparable’? Opens door to costly litigation, might therefore discourage hiring of women (or men).’ Similarly, Daron Acemoglu at MIT commented: ‘Fighting against discrimination is important, but such tax policies may backfire, for example, by discouraging the hiring of lower skill women.’ Richard Thaler at Chicago added: ‘These assessments are complicated econometrics exercises. This may not be the best strategy.’
Among the experts who expressed their disagreement that the proposed policy would be effective in closing the gender pay , Angus Deaton said: ‘Hard to enforce. Messy and burdensome. Good for lawyers and consultants.’ William Nordhaus at Yale thought it was ‘Not the right tool for changing social attitudes.’ And Steven Kaplan concluded that it was ‘Better to let the labor market sort this out rather than government.’
All comments made by the experts are in the full survey results.
Romesh Vaitilingam
@econromesh
July 2019
Question A:
In a case like the US women’s national soccer team where the revenues that they generate and their on-field performance both exceed those of the men’s team, there is no justification for lower pay.
Responses
Responses weighted by each expert's confidence
Question B:
Fining companies above a certain size that fail to provide the same remuneration to men and women employees performing comparable roles would be an effective way of closing the gender pay gap.
Responses
Responses weighted by each expert's confidence
Question A Participant Responses
Participant | University | Vote | Confidence | Bio/Vote History |
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Daron Acemoglu |
MIT | Bio/Vote History | ||
Respect for market forces is important, but these should be distinguished from systemic discrimination against certain groups such as women
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Alberto Alesina |
Harvard | Bio/Vote History | ||
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Joseph Altonji |
Yale | Bio/Vote History | ||
Gender differences in total World Cup revenue and in opportunities in professional soccer also affect pay.
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Alan Auerbach |
Berkeley | Bio/Vote History | ||
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David Autor |
MIT | Bio/Vote History | ||
There’s no simple market price for talent. But I don’t see why women’s team shouldn’t get same share of rents as men’s team
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Katherine Baicker |
University of Chicago | Bio/Vote History | ||
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Abhijit Banerjee |
MIT | Bio/Vote History | ||
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Marianne Bertrand |
Chicago | Bio/Vote History | ||
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Markus Brunnermeier |
Princeton | Bio/Vote History | ||
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Raj Chetty |
Harvard | Bio/Vote History | ||
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Judith Chevalier |
Yale | Bio/Vote History | ||
Obviously, revenue isn't the right concept and there are issues about measurement (shared sponsorships, etc).
-see background information here |
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David Cutler |
Harvard | Bio/Vote History | ||
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Angus Deaton |
Princeton | Bio/Vote History | ||
Those are my values. This is not a question about economics.
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Darrell Duffie |
Stanford | Bio/Vote History | ||
Seems like equal for pay for (at least) equal work, in the same job, should require no additional explanation!
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Aaron Edlin |
Berkeley | Did Not Answer | Bio/Vote History | |
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Barry Eichengreen |
Berkeley | Bio/Vote History | ||
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Liran Einav |
Stanford | Bio/Vote History | ||
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Ray Fair |
Yale | Bio/Vote History | ||
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Amy Finkelstein |
MIT | Bio/Vote History | ||
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Austan Goolsbee |
Chicago | Bio/Vote History | ||
Seriously, WTF?
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Michael Greenstone |
University of Chicago | Bio/Vote History | ||
revenue and on-field performance are compelling output measures for national soccer teams...(plus 9 y.o. daughter feels VERY strongly)
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Robert Hall |
Stanford | Bio/Vote History | ||
Justification is not a relevant concept in the economics of wage determination. Wages depend on a variety of forces, some bad and some OK
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Oliver Hart |
Harvard | Bio/Vote History | ||
Of course,one can provide a justification:maybe their outside options are different. But it is not smart policy by U.S. football.
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Bengt Holmström |
MIT | Bio/Vote History | ||
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Caroline Hoxby |
Stanford | Bio/Vote History | ||
The issues are more complicated than the question's wording assumes. One cannot answer a question that conditions on false premises.
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Hilary Hoynes |
Berkeley | Bio/Vote History | ||
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Kenneth Judd |
Stanford | Bio/Vote History | ||
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Steven Kaplan |
Chicago Booth | Bio/Vote History | ||
Depends on contract. If both have all variable or all fixed pay, yes. If women's contract is fixed, risk premium could pay men more.
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Anil Kashyap |
Chicago Booth | Bio/Vote History | ||
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Pete Klenow |
Stanford | Bio/Vote History | ||
Jonathan Levin |
Stanford | Bio/Vote History | ||
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Eric Maskin |
Harvard | Bio/Vote History | ||
If the women's team really does generate more revenues, then, yes, paying them less seems unjustified
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William Nordhaus |
Yale | Bio/Vote History | ||
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Maurice Obstfeld |
Berkeley | Bio/Vote History | ||
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Emmanuel Saez |
Berkeley | Bio/Vote History | ||
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Larry Samuelson |
Yale | Bio/Vote History | ||
It's a normative judgement, but commonly accepted standards for evaluating pay do not justify a differential.
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José Scheinkman |
Columbia University | Bio/Vote History | ||
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Richard Schmalensee |
MIT | Bio/Vote History | ||
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Carl Shapiro |
Berkeley | Bio/Vote History | ||
From a fairness perspective, seems very difficult or impossible to justify. Need to know more re economic setting for full answer.
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Robert Shimer |
University of Chicago | Bio/Vote History | ||
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James Stock |
Harvard | Bio/Vote History | ||
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Richard Thaler |
Chicago Booth | Bio/Vote History | ||
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Christopher Udry |
Northwestern | Bio/Vote History | ||
One could of course make up "justifications", but they would be specious. This is not a market based outcome.
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Question B Participant Responses
Participant | University | Vote | Confidence | Bio/Vote History |
---|---|---|---|---|
Daron Acemoglu |
MIT | Bio/Vote History | ||
Fighting against discrimination is important, but such tax policies may backfire, e.g., by discouraging the hiring of lower skill women
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Alberto Alesina |
Harvard | Bio/Vote History | ||
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Joseph Altonji |
Yale | Bio/Vote History | ||
It would probably reduce the gender gap by a modest amount, would also have costs.
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Alan Auerbach |
Berkeley | Bio/Vote History | ||
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David Autor |
MIT | Bio/Vote History | ||
I strongly support equal pay. Extremely difficult to write good laws that enforce this goal since marginal product is not usually observable
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Katherine Baicker |
University of Chicago | Bio/Vote History | ||
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Abhijit Banerjee |
MIT | Bio/Vote History | ||
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Marianne Bertrand |
Chicago | Bio/Vote History | ||
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Markus Brunnermeier |
Princeton | Bio/Vote History | ||
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Raj Chetty |
Harvard | Bio/Vote History | ||
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Judith Chevalier |
Yale | Bio/Vote History | ||
Implementation issues an important challenge.
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David Cutler |
Harvard | Bio/Vote History | ||
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Angus Deaton |
Princeton | Bio/Vote History | ||
Hard to enforce. Messy and burdensome. Good for lawyers and consultants.
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Darrell Duffie |
Stanford | Bio/Vote History | ||
There may be better ways? Naming and shaming might be effective? I expect US Soccer to respond properly to the justified outcry.
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Aaron Edlin |
Berkeley | Did Not Answer | Bio/Vote History | |
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Barry Eichengreen |
Berkeley | Bio/Vote History | ||
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Liran Einav |
Stanford | Bio/Vote History | ||
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Ray Fair |
Yale | Bio/Vote History | ||
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Amy Finkelstein |
MIT | Bio/Vote History | ||
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Austan Goolsbee |
Chicago | Bio/Vote History | ||
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Michael Greenstone |
University of Chicago | Bio/Vote History | ||
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Robert Hall |
Stanford | Bio/Vote History | ||
That is not to say that such a policy is the best way to deal with malignant sources of depressed earnings of women
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Oliver Hart |
Harvard | Bio/Vote History | ||
I think it could help. Whether it is the best way is another matter. There would no doubt be some distortions.
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Bengt Holmström |
MIT | Bio/Vote History | ||
It may take several design rounds. The goal is to change the mindset and attitudes. Some form of collective pressure is needed.
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Caroline Hoxby |
Stanford | Bio/Vote History | ||
The principle would be very hard to implement in relatively free labor markets. Define comparable outside of bureaucracies: near Impossible.
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Hilary Hoynes |
Berkeley | Bio/Vote History | ||
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Kenneth Judd |
Stanford | Bio/Vote History | ||
Define "comparable roles." If two jobs perform the same task, but one offers much more flexibility in hours, then a wage difference is fine.
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Steven Kaplan |
Chicago Booth | Bio/Vote History | ||
Better to let the labor market sort this out rather than government.
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Anil Kashyap |
Chicago Booth | Bio/Vote History | ||
comparable is so tricky, for instance how do we adjust for experience, careers interruptions, etc?
-see background information here |
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Pete Klenow |
Stanford | Bio/Vote History | ||
Seems too easy to get around through sorting, and might even backfire.
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Jonathan Levin |
Stanford | Bio/Vote History | ||
Direct way to mandate pay equity, but hard to assess without specifics.
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Eric Maskin |
Harvard | Bio/Vote History | ||
This questions is stated too vaguely. What does "comparable roles" mean?
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William Nordhaus |
Yale | Bio/Vote History | ||
Not the right tool for changing social attitudes.
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Maurice Obstfeld |
Berkeley | Bio/Vote History | ||
Devil is in the details -- define "comparable"? Opens door to costly litigation, might therefore discourage hiring of women (or men).
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Emmanuel Saez |
Berkeley | Bio/Vote History | ||
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Larry Samuelson |
Yale | Bio/Vote History | ||
Too much lies in the details, such as what would comprise "comparable roles" and how this is to be implemented, to evalutae this proposal.
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José Scheinkman |
Columbia University | Bio/Vote History | ||
Compensation should depend also on performance.
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Richard Schmalensee |
MIT | Bio/Vote History | ||
Sounds like a sensible plan, but administrative problems may turn out to be serious.
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Carl Shapiro |
Berkeley | Bio/Vote History | ||
Effective in the sense of achieving the stated goal.
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Robert Shimer |
University of Chicago | Bio/Vote History | ||
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James Stock |
Harvard | Bio/Vote History | ||
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Richard Thaler |
Chicago Booth | Bio/Vote History | ||
These assessments are complicated econometrics exercises. This may not be the best strategy.
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Christopher Udry |
Northwestern | Bio/Vote History | ||
Defining comparable seems difficult. And wouldn't address most of the gender gap, which is across, not within, task.
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