Sunday, November 10, 2013

Korea’s “Gender Income Gap” is NOT Based on Gender Discrimination

For the past few years, Korea’s Gender Income Gap has been widely reported in international and national media outlets (as can be seen here, here, here, here, and here). Each time the media reports on Korea’s ‘dismal’ gender income gap, it is always followed by the usual hand-wringing and calls for the central government to do something about this.

As a result, over the past few years, the Korean government has passed laws that ensure maternity leave for up ninety days. Furthermore, earlier this year, the Korean government increased spending from previous years in order to promote gender equality (₩13.3 trillion) and plans on spending up to ₩22.4 trillion, a 68% increase, next year.

Despite all this, however, a not insignificant number of women are either pressured to quit their jobs or indeed do quit their jobs after giving birth. Furthermore, as can be seen in the news articles that were cited earlier, Korea’s “gender income gap” ranking has fallen over the past few years instead of climbing. It would appear that throwing money at the problem of gender income inequality has not had the desired effect of solving the problem.

Source: http://americaexplained.files.wordpress.com/2010/12/throw_money.png

Those who find these statistics offensive have pointed their fingers at various factors but they all boil down to one thing – gender discrimination. Therefore, many people who are calling for the closing of the “gender income gap” have been demanding for “equal pay for equal work.” The government has also weighed in on this by amending the Equal Employment and Support for Work-Family Reconciliation Act. Article 6-2 Section 2.3 emphasizes the importance of “the principle of equal pay for work of equal value.” In fact, an employer who is found guilty of violating this law faces imprisonment of up to three years or a fine of up to ₩20 million.

“Equal pay for equal work” is a beautifully crafted call to arms. Its unnuanced brevity is the verbal embodiment of a clenched fist; loudly demanding an end to injustice. It is as poetic as political rallying calls come. Unfortunately, however, the phrase is intellectually bankrupt.  This phrase (and, in fact, most arguments made in favor of closing the “gender income gap”) is intellectually bankrupt because of several factors.

Firstly, this cleverly constructed political phrase does all that it can to obfuscate one very important factor: statistical misreading.

  1. Statistical Misreading

The OECD report that showcases member nations’ “gender wage gap” claims that the difference between male and female earnings is expressed as a percentage of male earnings. However, due to the fact that there are various factors at play such as the different types of jobs held by men and women, which translates to the differences in pay (depending on other factors such as industry type and level of unionization) and thus differences in taxes and pension contributions, and work experience, the only way the “gender wage gap” can be measured is via accounting for the median and average wage earnings.

In other words, the “gender wage gap” is based on aggregate information – information that does not measure individual jobs or tenure or hours worked, but merely the aggregate of all jobs and all employees.

If we want to see if gender discrimination is the culprit behind the “gender wage gap,” it becomes important to control for all other differences between men and women in order to explain the gap in a non-discriminatory fashion. However, seeing that these statistics do not compare men and women who hold the same job or do the same work, much less find a satisfactory way for controlling all those other differences, it requires a leap of faith, or a political agenda, to make the claim that the gap is a result of gender discrimination.

Source: http://us.123rf.com/450wm/radiantskies/radiantskies1211/radiantskies121102472/16529826-abstract-word-cloud-for-political-agenda-with-related-tags-and-terms.jpg

  1. Greedy businesses only care about the bottom line... until they don’t.”

Another thing that the phrase “equal pay for equal work” carefully neglects is the Marginal Revenue Product Theory of Wage Determination, which is a fancy way of saying that an individual’s wage is dependent upon his/her level of productivity. Productivity, for its own part, is NOT synonymous with “equal work.”

For example, let us say that there are two men who both work ten-hour days at a construction site and they both have the same job of moving a tonne of bricks up three storeys. The first man moves the bricks by carrying them on his back up the three storeys. The second man moves the bricks via a pulley and lever system. At the end of the ten-hour work day, though both men have worked the same number of hours (equal work), assuming that all other factors remain unchanged (ceteris paribus), the second man would have moved many more bricks than the first man had (unequal productivity) because of his greater efficiency.

From the business owner’s perspective, the second man has a greater rate of marginal productivity of labor aka he works harder and smarter and, therefore, has a higher marginal rate of utility aka he is worth the pay. Therefore, when both men ask for a pay raise, the business owner is more likely to acquiesce to the second man’s request than the first man’s.

As a result, considering the fact that men and women, for various reasons of their own, have a tendency to work different jobs and therefore have different rates of productivity (as well as there being different levels of supply and demand for those different kinds of jobs), it makes sense that there is some amount of difference in the income levels between men and women.

However, let us assume for a moment that there is no difference in productivity between men and women as the phrase “equal pay for equal work” so often insinuates. Let us assume that despite the equal level of productivity between men and women, men do, indeed, on average earn 38% more than their female counterparts.

If that were true; if women are not getting equal pay despite doing the same job with the same level of productivity, then why would any business, which almost always cares about profitability above all else, employ any man at all? What reason would there be for businesses to not employ only women to fill all of their job positions and save 38% on their labor costs (labor costs usually being most businesses’ single greatest expenditure)? If greedy business executives’ main concern is almost always profit maximization, how do we account for so many “overpaid” men in the workforce?

Source: http://positivesharing.com/wp-content/uploads/2006/08/overpaid.jpg

Do business executives only want to maximize profits until they happen to come across a woman at which point they decide to forget about maximizing profits so that women will sooner or later realize that their only proper place is in the kitchen/bedroom? The answer is obviously “No.”

Assuming that men and women are equally productive, the sexist employer has no choice but to become extinct, courtesy of market forces. If he were stupid enough to hire a man when he could have employed an equally productive woman for less money (because of the pay gap), his gender-blind competitors would hire her, and price him out of business.

Businesses have different needs when it comes to employment; and men and women, who have a tendency to work different jobs (which in turn are affected by different rates of supply and demand) are often paid different wage rates. To insinuate that this is somehow the result of some kind of woman-hating conspiracy that is engineered by a cabal of patriarchal Taliban-lite business executives is, to say the very least, disingenuous.

  1. The Mommy Factor

In an editorial titled “The Fear of Becoming a Housewife,” which was published in Groove Magazine in August 2013, the author, a self-proclaimed Feminist, who married a supposedly modern Korean man, wrote that she was disappointed that her husband “simply could not imagine a home in which the husband and wife share household duties.”

The fact is that women bear a disadvantage when it comes to working in the market not because of some kind of inferiority, but rather because women, especially after marriage and having children, tend not to be able to be as productive in their occupations as the men are because women, who would otherwise have equal productivity with men, tend to be more subjected to their intensive home and child-rearing interests than men with children.

Either due to biological reasons or social behaviorism (or perhaps both), marriage tends to result in vastly unequal division of housekeeping and child-rearing responsibilities. As a result, men, who tend to pick jobs that are relatively more dangerous and better paying (especially so when they become fathers), find that marriage enhances their take-home pay. On the other hand, again, either due to biological reasons or social behaviorism or both, women tend to seek jobs that have more flexible hours with slow obsolescence rates (jobs where their skills or knowledge has not become outdated by the time they resume their careers after they raise their children; jobs such as librarians and teachers, as opposed to software engineers) so that they can spend more time with their families, which in turn reduces their take-home pay.

Though this may seem unfair upon first glance, this is only part and parcel of the fact that nothing in life is free; goods are scarce, and thus everything has a cost. And as everything else, time has a cost. When an individual devotes a large part of his/her life/thoughts/energy to any one particular task, he/she will be able to accomplish less in alternative pursuits than otherwise (opportunity cost). Similarly, when a woman/mother devotes a large part of her life/thoughts/energy to housekeeping and/or child-rearing, in itself not an insignificant task, it is only natural that it comes at the expense of her productivity at her job.

I wanted to find a picture of a "super mom" but there wasn't a single picture that wasn't just insultingly cartoonish or condescending.  Hence, "No Image Available!"
Source: http://www.clubwebsite.co.uk/img/misc/noImageAvailable.jpg

  1. More female executives to close the “Gender Income Gap?”

In recent years, some have claimed that the reason that Korea has such a wide “gender income gap” is due to the dearth of female business executives; that somehow this male-dominated business culture, which fails to understand women’s issues and plights, is one of the main factors that perpetuates gender discrimination. Therefore, naturally, ‘improvements’ in gender diversity in executive boardrooms in places such as Samsung, Hyundai, Kia, and LG will bring about the necessary changes.

No one who makes these claims ever seems to like to share with the rest of the world the evidence of the causal links between gender diversity and equalized gender income gaps and/or improved profitability. There are certainly companies around the world such as IBM and Johnson & Johnson that are more women-friendly AND profitable. However, correlation is not the same as causation. A more plausible explanation for the correlation between these businesses with strong financial performance is that these businesses, which have been powerful players in international business for a very long time, can better afford social engineering initiatives such as the appointment of more women onto their boards. It also does not hurt that their social engineering initiatives of this kind gives them a good public relations story.

The fact of the matter is that boardroom members of Goldman Sachs or Hyundai Motors are NOT representative of the vast majority of society. That elite groups inhabit a different social universe than the majority of the population is hardly surprising. There is no evidence to suggest whatsoever that forcing these groups to “better” mirror society at large would somehow lead to higher rates of profit.

Would gender diversity, in all levels of industry, lead to less social injustice?  It is certainly plausible.  However, there is no causal proof (as yet) that an increase in the number of female executives at the top would necessarily lead to equalized gender income gaps and/or improved profitability.

  1. Milton Friedman’s Argument Against “Equal Pay for Equal Work”

And here it is; straight from the horse’s mouth.





Firstly, even though Dr. Friedman did not challenge the premise’s assumption that equal work is synonymous with equal productivity, he is correct when he says that “Equal Pay for Equal Work” laws would have the same effect on women that the minimum wage has on unskilled labor, i.e. disemployment (though there is no evidence whatsoever to suggest that this is a direct causation, there certainly seems to be a positive correlation between “Equal Pay for Equal Work” laws and the disemployment of women considering Korea’s worsening “Gender Income Gap”).

While those who support “Equal Pay for Equal Work” laws may be well-intentioned, such laws must not be judged based on their good intentions, but rather their actual results. Instead of throwing money at the “gender income gap” problem, which might not even be a problem at all, as the Korean government has been doing, a better course of action for the government might be to rescind those policies which have brought gender economics/politics to its present disarray.

  1. Real Sexism vs. Perceived Sexism

This is in no way to suggest that sexism does not exist. There are many well-written and well-researched articles in The Grand Narrative and Korean Gender Café, just to name a few, to know that sexism is not a figment of peoples imagination.

That businesses do not pay women as much as they pay men for differences in productivity, supply and demand, and the different choices that are made by men and women in their respective lives is not a result of gender discrimination, but rather a reflection of reality. Claiming that this “pay gap” is a result of sexism is comparable to yelling at the bathroom scale for telling us that we are overweight and attempting to pass a law that “fixes” this “pay gap” is to indulge in that ultimate totalitarian fantasy where passing a law against bad weather will actually have its desired effect.

The real sexism that ought to be challenged is not the “pay gap,” but rather Korean society’s long-held belief that housekeeping and child-rearing responsibilities are strictly the domain of women. And there is no real way to challenge that without challenging the efficacy, the morality, or even the necessity, of a nuclear family. Cultural changes, which are the result of moral and philosophical changes, must always precede political changes. Any attempt to usurp that order will be met by nothing more than a series of failures. The “gender pay gap” is an economic issue, but those who advocate “Equal Pay for Equal Work” laws are attempting to turn it into a political one, because, as usual, political arguments require much less thought to understand than economic arguments.

However, as Murray Rothbard said about economics: “It is no crime to be ignorant of economics, which is, after all, a specialized discipline and one that most people consider to be a ‘dismal science.’ But it is totally irresponsible to have a loud and vociferous opinion on economic subjects while remaining in this state of ignorance.”

Source: http://weakonomics.com/wp-content/uploads/2011/01/bernanke-dismal-science.jpg

24 comments:

  1. Quick comment on your "equal pay equal work" point: You seem to argue that if women are paid less but just as productive as men, market forces would lead to the hiring of women and men wouldn't be hired at all. However, there is another factor I don't think you address: the persistent belief that a man should be the head of a family, is preparing to be a head of a family, or should be the breadwinner of the family. This belief does affect hiring, promotion, hours/salary.

    What do you think of mass layoffs of married women who were married during the IMF crisis? Even nowadays women who are engaged delay informing their employers until the last possible moment.

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    1. The first point that you raise is about patriarchy. Let me make this clear: I am opposed to patriarchy as a socio-political instrument. Korea has proven that it is not without its problems, if I may be allowed to understate.

      However, patriarchy as a way how families are run, I think, is a different matter. Firstly, we all know the primitive reasons why patriarchy was so successful - men were physically stronger than women. Secondly, it's also to do with the survival of the species - specifically, the fact that women are much more important for the birth of future generations than men. Case in point, let's take a look at Germany and Russia after the Second World War. During the war, millions upon millions of German and Russian men died. However, after the war ended, though it took time, both the Germans and the Russians managed to repopulate. That is because it doesn't require too many men to impregnate women. However, in a hypothetical example, if the war between the Germans and the Russians were fought not by men, but by women, and millions upon millions of German and Russian women died, I think it's possible that modern-day Europe would look very different from how it looks now.

      In that regard, I think patriarchy makes sense. It is the way humans have evolved. That being said, I am not un-conflicted about it. This is why I think that the only real way to challenge the persistent belief that a man should be the head of a family is by challenging the efficacy, the morality, and the necessity of a nuclear family. Whether or not that is a good thing to desire, however, I am not prepared to answer. I don't know.

      As for your second point about the layoffs of married women during the Asian Financial Crisis of 1997 (I hate calling it the IMF Crisis because it sounds like as though the IMF were to blame for the mess that Korea was in), I think that, at least from a business perspective, it made sense. As I said, most men and women seek very different jobs. Men tend to go into higher-risk/higher-pay professions, such as engineering, etc., jobs that businesses either need or at least have a difficult time laying off. Women, on the other hand, seek jobs that are more flexible and tend to find work in the service sector, where unionization tends to be weaker than, say, in the manufacturing industry. And especially during an economic crisis, a lot of jobs in the service sector tend to be the first to be put on the chopping block. For reasons that are neither good nor bad, but just different, it is easier to lay off women than it is to lay off men. I don't think the women were laid off because they were women and they were married. I think they were laid off for reasons that had very little to do with that.

      That being said, laying off workers en masse is one thing. Firing a woman for no other reason than because she is married is another thing entirely. If a woman can honestly prove that she was let go for no other reason other than the fact that she had gotten married, then she has grounds to file a class action lawsuit for wrongful termination. And sue away, I say.

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    2. John, these were companies in the late 1990s in which BOTH men and women worked, but women were laid off. Here are my rough translations of a couple of great references on the topic:

      According to Chang Jiyeon, 58.4% of female workers who have children have considered quitting their jobs due to the pressure and responsibility of childcare and only 1 in 4 working mothers does not cite having to time birth and family responsibilities in order to maintain participation in the workforce. At the same time, working mothers tended to strongly identify as members of their workplace and did not easily resolve their time use conflicts. It is not that women wanted to leave work in order to care for families, but rather that they faced constrained choices and a lack of social support for their work, amidst insufficient childcare institutions and an inadequate redivision of labor between the sexes. Source: 장지연, 숨겨진 선택: 기혼여성노동자의 일과 자녀양육, 171.

      From Park Hye Gyong’s analysis we can see how the pattern and discourse of familism has been retrenched once again as 1) a consequence of nuclear family emphasis on married couples, 2) the economic crisis tied the wife’s status to familism and the gendered division of labor, and 3) women’s equality was discursively tied to housewife’s work – equating all women with housework – and entrenching social attitudes about proper women’s work. Source: .

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    3. Exactly. As I said, it was, and unfortunately still is, easier to lay off women than it is to lay off men. But from management's perspective, and I am conjecturing, the decision to lay them off had little to do with the fact that they were women, but rather the professions that they were in. I think it is a stretch to claim that this was done with malicious intent i.e. purely gender discrimination.

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    4. Um . . . except that in Chelle's example of the IMF layoffs, women and men WERE in the same professions. And it was openly attributed to the idea that men were "family heads" who "needed work"

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    5. John, here are two works I suggest you read about the IMF example... it is a well documents and well known case in which there was widespread gender discrimination in an intentionally planned policy of laying off women working in the same professions and companies as men. Here is an article that cites it: http://www.bupedu.com/lms/admin/uploded_article/eA.974.pdf

      I highly recommend this book that discusses how during that period EVEN homelessness and welfare policy were gendered and discriminated against women in favor of homeless men: http://www.amazon.com/South-Koreans-Debt-Crisis-Asia-Pacific/dp/0822344815

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    6. So for women laid off for clearly gender discriminatory reasons back in 1997-1999... what did that career 'interruption' do to the rest of their careers? Have they climbed as high or as fast as they might have? These and similar questions are the ones that I think this blog post is not asking, but should.

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    7. I’ve read the first link you provided but have not read the book, which I would have to buy. I think the book will have to wait (to be honest, for an indefinite period of time).

      As I read the first link, however, I don’t know if I missed it, but I could not find the bit where the women who were laid off worked in the same profession as the men. If I missed it, could you tell me where it was written?

      From what I understood, yes, the women worked alongside the men; that much has been made clear. But I wasn’t able to see where it was mentioned that the women had the exact same jobs as the men.

      The two things that caught my attention were:

      1) “Government statistics cannot correctly cover how many housekeepers, maids and cleaners have been told to not come to work by their employers or how many young secretaries, office girls and waitresses have been fired without prior notice or any severance pay.”

      As I said before, during times of economic crisis, one of the first things that get sent to the chopping block are the service jobs that are considered non-essential. It so happens that a lot of those positions are held by women, but again, unless stated otherwise, it doesn’t seem that the job cuts were aimed at women per se, but rather at unnecessary job positions – extraneous costs that the business could no longer afford.

      2) “The conflict was eventually resolved with the help of government mediators, and a compromise was worked out where Hyundai would lay off only 277 workers. Neither the Economist nor Koo remark on the gender of the fired workers, but of the 277, 167 were the entire staff of women workers from the cafeteria.”

      Now THIS bit has meat that we can sink our teeth into. The good ol’ boys got together in a room, where most likely these cafeteria workers were not invited for a sit-down, and then said “Well, we don’t want things to get too ugly, and we need the money, so let’s fire the women folk!”

      But that’s only one plausible scenario. Another plausible scenario might be that they decided to avoid a bloody confrontation by firing the non-unionized workers – those who didn’t have the union-backing needed to start and sustain a bloody confrontation with management. And it just so happened that those non-unionized workers were the female cafeteria staff.

      Considering the other possibilities, I am not convinced by these authors’ insinuation that this was the result of a gender-based conspiracy.

      There was one other thing that got my attention, however. It was the bit about the media telling women that they should boost their husbands’ morale. I don’t know how much of that was based on the decisions of male executives who must have come right out of “Mad Men” or came from various government agencies that were busy engaging in social engineering but regardless of the source, THAT was obviously based on sexism. But the role of the media, which seems to have come after the fact, and the laying-off of the women seem to be only tangentially related.

      Now if we want to talk about the reasons as to why women put themselves in the economic position that so many women found/find themselves in, now THAT is an ideal topic where we can find near endless evidence of gender bias. But that, I think, is a different topic.

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  2. I'm interested to hear your explanation of why some countries in Northern Europe have smaller gender income gaps, and how they got where they are... do the arguments you've made apply only in Korea, or also in other countries with lower gaps? And if they don't apply to those countries, why? And if they do apply to those countries, why would they have made the (supposedly) economically self-defeating choice to close the gap?

    Did they do it by paying attention to these economics you mention, or did they have other priorities? Why would they choose such other priorities?

    Do you think reducing everything in life into profit calculations is possible... or wise? And if women are so unproductive because of family obligations, don't you think say, building an adequate daycare infrastructure, for one, would be considered an investment in Korea's future, if it allows women to be as productive as they are capable of being?

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    1. I would need to do a lot more research about the way Northern European countries' economies are run in order to give an answer that has a semblance of rationality. Right now, I can only make guesses. And my guess is that there are three possibilities:

      1) The cultural/social/religious/historical/educational structure of those countries, which are very different from Korea's, allowed those men and women to reach equal, or at least close to equal, productivity rates, which has allowed for the gender income gap to be as small as they are.
      2) The fight came down to Economics vs. Politics. And Politics won.
      3) Or it could be some combination of the above two.

      If it is only number two, which is unlikely, then the question, as you said, would be "why would they have made the (supposedly) economically self-defeating choice to close the gap?" Honestly, fuck if I know. People are oftentimes irrational and oftentimes vote against their own interests all the while thinking that they are being perfectly rational and voting for their own interests.

      Reducing everything in life into profit calculations is, I think, impossible. With all due respect to John Stuart Mill, homo economicus is just as real as the Yeti. That being said, I think it is important for economists and policy makers to make judgments based on not only what can be seen, but what is also unseen.

      As for daycare infrastructure, I am all for it. I think it's a great idea. How it is done, however, is another thing entirely, which requires a whole new series of discussions.

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  3. If the pay gap is exacerbated by women and men being in different professions, we can't just stop there, we need to ask ourselves why/how that came to be. In doing so, I am offer up an example scenario tying together gender roles and employment tracks, but the breadwinner isn't the only example that is really out there in play. Interesting literature follows the life course of women and men to find that first jobs out of college, maternity leave, 'part-time status' in economic downturns etc. restrict upward promotion in ways that affect women more severely within the field compared to men who started with similar qualifications. Some literature goes too far to assert that wage inequality is justified. We can't just look at the end point of someone's career and say "middle manager vs. CEO - of course he is paid better" because it is just as much a manipulative agenda as obscuring the statistical data. "Strangely" Korean newspapers reported last year that more men are graduating college and securing jobs than women graduating from college, even though there are roughly equal numbers of women and men graduating these days - imagine that employment gap, even if it is only 6 months or a year of unemployment, projected 20 years into the future. This is why life course studies are also important to supplement statistics-based research.

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    1. I think we are in complete agreement about this.

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  4. Amen! Loved your post. I recently co-wrote a chapter of an upcoming book regarding access to equal employment and income through wages and salaries for men, women, and visible minorities; and, truth be told, stats often pointed to a problem of social evolution within a given society, rather than overt sexism/racism. It's the people's mindset (that has been engraved into them from the onset of their life), which is often unexplainable even by themselves - as it stems from unconsciously socialized thought processes - that needs to change.

    "The real sexism that ought to be challenged is not the “pay gap,” but rather Korean society’s long-held belief that housekeeping and child-rearing responsibilities are strictly the domain of women."

    Toodles!
    Hana

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    1. Thank you for your comment, Hana. I'd be interested to know the title of this upcoming book, as well as the name of the author(s).

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  5. "The real sexism that ought to be challenged is not the “pay gap,” but rather Korean society’s long-held belief that housekeeping and child-rearing responsibilities are strictly the domain of women."

    I think this is the crux of the issue -- the gender wage gap, the hiring statistics, the glass ceiling, the lack of infrastructure to support working parents, are all manifestations of this root problem.

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    1. I agree. As I said to Chelle earlier, if we want to talk about the reasons as to why women put themselves in the economic position that so many women found/find themselves in, that would be an ideal topic where we can find near endless evidence of gender bias. But that, I think, is a different topic.

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  6. A few comments I would like add.

    1. If an organisation like the OECD makes statistics, I am pretty sure that they do some double fact checking and verifying if their stats are "correct".

    2. I don't see how the leverage of technology impacts the difference in wage for either sex. I don't understand why a sexist manager would go out of business either? Given that the labor pool is big enough, one can find sufficient male labor force without having to pay more. Given that we have a non-sexist manager, he would pay man and woman equally, therefore not having a significant advantage over the sexist one. There is no strategic advantage to either status.

    3.You refer to the "existing" situation, where woman do more housework, and therefore spend more energy at home than at work. This is exactly what sexism is, and what the statistics are explaining. It is not because a situation is in existence that it is not wrong. You are putting the tail on the wrong end of the horse.

    4.You are working the other way around again. Profitability has NOTHING to do with gender issues, what so ever. Profitability doesn't increase with more woman in the workforce, neither does profitability increase the amount of woman in the workforce. Bollocks. The only distinguishing factor is education. More over, how men are educated. In strong engineering business, there is an overwhelming amount of men, since mostly men study engineering. In finance departments there are more woman, since there is a more stable relationship in the studies of economics. In Hospitals there are more female nurses than male nurses BECAUSE woman study those things more (mostly out of social pressure).

    5.I am no fan of "Equal pay for Equal work". Pay has to be in correlation with the value of the work performed, and actually has nothing to do with gender (but everything with education....). I actually pay my cleaning staff more than my admin staff, how about that.

    6.Sexism starts at the cradle, what you see at the level of the workforce is nothing more than the results of two decades of sexism. I myself wrote something about the measuring sticks men use to put woman in their place, and it runs deep in any culture. http://wangjangnim.com/korean-mums

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    1. 1) I never questioned the accuracy of the OECD figures. Considering the organization’s resources and reputation, I have no reason to doubt their numbers. What I was challenging was the way those numbers are being interpreted. The study says that men earn 38% more than women. But, and the report admits to this as well, those statistics are calculated via median and average wages without taking into consideration the different occupations that men and women work. So it was the interpretation of the figures (the interpretation being “all women earn less than 38% of what their male counterparts earn”) that I was challenging.

      2) I don’t recall talking about “leverage of technology.”

      In the example that I gave, I started off with the assumption that men and women are equally productive and that we live in a competitive market economy. The reason that the sexist business owner would go out of business is that his business, assuming that it is not a state-sanctioned/sponsored monopoly, faces competition. In a competitive market economy, businesses don’t usually stay competitive by raising prices. Raising prices in a competitive market, assuming that the raising of prices is not caused by general inflation, is a sure way of giving up market share. In a competitive market economy, businesses stay profitable by minimizing costs.

      Now when a sexist business owner has the opportunity to employ a woman who is as productive as a man but someone that he can pay 62% of the wages owed a man (because of the “pay gap”) but refuses to do so and chooses to employ a man for 100% of the wages owed him, this business owner’s expenses are, by definition, higher than it should be.

      You said, “Given that the labor pool is big enough, one can find sufficient male labor force without having to pay more.” I never said that the business owner has to pay his male more than what he owes them. But he does owe his male employees the full competitive wage. Otherwise, his male employees will leave as well. But paying them 100% of the wages is still a lot more than the supposed 62% that he would have owed his female employees had he chosen to employ them. When his gender-blind competitors can under-price him as a result of having hired the female workers that he refused to employ, he will have no choice but to watch his market share being taken away from him, eventually to be driven out of business.

      You also said, “Given that we have a non-sexist manager, he would pay man and woman equally, therefore not having a significant advantage over the sexist one.” This requires the assumption that other gender-blind business owners will have no problems with paying their newly employed female employees 100% of the wages that they would have paid men, as opposed to the supposed 62% that they could have chosen to pay instead. I do not buy this assumption. They might be gender-blind enough to hire women but I doubt that most business owners are in the charity business, but rather in the profit-making business. Perhaps they might be willing to pay more than the 62% but considering the fact that they are also operating in a competitive market economy, there is a good chance that it won’t be that much higher than the 62%. That is why, assuming that both men and women are equally productive and the gender income gap is as it is currently interpreted by those who support “Equal Pay for Equal Work” laws, a gender-blind business owner who hires women will have a great strategic advantage over his sexist competitor.

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    2. 3) You said, “It is not because a situation is in existence that it is not wrong.” I wholeheartedly agree. Just because the status quo is in existence does not mean that it is not wrong. But what I was talking about is the vastly unequal division of housekeeping and child-rearing responsibilities that are divided between a husband and a wife after marriage. I am in no way saying that this is not wrong. But is it the responsibility of business owners to neglect this fact? Business owners have one responsibility only: to remain profitable. It is not their moral duty to dole out charity to others. Now if we want to talk about how we can change the status quo, as you said, I think education is key. Teach people a new morality that is different from what patriarchy has taught us for millennia. Teach them from a young age a whole new paradigm. Will that be possible? I honestly don’t know. The problem with idealists is that they like to say that people should be equal in every way. I am of the opinion that people are not equal and will never be equal (with the sole exception of being equal before the law). So I don’t know if they’ll ever be successful in reaching their (Utopian) goals. But I wish them luck.

      4) I wasn’t quite sure what you were rebutting to with this point.

      5) Of course one’s take-home pay has to be in correlation with the value of the work performed. But my point was that there IS a difference in pay between men and women because of the differences in productivity/value of the work performed. Now keep in mind that I am NOT saying that women are generally less productive than men. By productivity, I mean three things:

      a) A ratio of outputs to inputs.
      b) The asymmetrical division of housekeeping and child-rearing duties, which forces most women to be less willing to work longer/inflexible work hours, etc., hence tending to make women less productive than men.
      c) The level of supply of the women’s labor in relation to the kinds of jobs that they are willing to work, and the level of demand for their services.

      Now if we are talking about men and women who do the same kind of work (for example, male and female ESL teachers in a hagwon) who both have the same level of experience and expertise and productivity levels, of course it only makes sense that they are paid equally. But in the aggregate economy, when the numbers are talking about a multitude of men and women who all work vastly different jobs, productivity (in the manner that I defined) has to come into effect, I believe.

      6) I do not disagree with you that sexism is something that is learned as people grow older. Now it’s true that nothing exists in a vacuum. I do not at all doubt that there are sexist business owners who think that they can pay women less because they think that women are inferior, they think that they can get away with it, etc.

      However, the way the “gender income gap” is interpreted by the general populace seems to suggest that every other business owner is a sexist pig. This is something that I reject entirely. The differences in income, where they are present, are due to the reasons that I have already specified and is a reflection of reality.

      That was why I compared the pay gap to a bathroom scale. We might not like what we see but yelling at the bathroom scale isn’t going to change the fact that we are overweight. As you and I both agree, that the status quo exists does not mean that it is not wrong and yes, education is key. How that education is given and who does the educating and what the education will be, of course, are an entirely different matter.

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    3. About the "leverage of technology," were you talking about the pulley and lever system that I was talking about? I wasn't trying to make a point about technology. I was merely using it as an example of one person being more productive than another.

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  7. Okay, one more try.
    Your basic tenet is that the differences in wages between man and woman are not based on their respective sex, but on their relative value added to the business. Am I right?

    You look at the OECD statistics, where they claim that 38% difference in mean wages between the sexes does not lie based on the individuals sex. You try to build a different explanation on the statistics. The numbers are good, the reason is too "simple". We'll work with that.

    The reason I used technology is because you used technology, let's make the issue non-gender, non-technology. You have a man who wheigs 60kg and is fit, and you have a man who wheighs 100kg and is fit.. Simple physics tells us that man B can carry 66.67% more wheight, therefore the difference in wheight should explain a difference in wage, right? I have yet to see a statistic that does that.
    There are 2 main variables that determine wage differences that have an impact on wage; one is height and one is beauty, nobody knows why. This is an interesting read (http://www.tandfonline.com/doi/abs/10.1080/13504850110047605#preview). It claims that physicall attributes show no significant difference for men, but it does show for woman. Strange. Just Google "Physical attributes that have impact on wage" and you'll find your pick. I also wrote this (http://wangjangnim.com/rank) where we ahve some crossing points. Appearance has an effect on wage, and more so for woman than for man, within the group. it does not yet explain the difference between man and woman, but we'll get there. Why would women be judged on looks, but men are not? (I would say it is sexist, wouldn't you?)

    Let's see if we can find some statistics that can find a significant difference between the productivity of a man vs. a woman. This (http://www.irle.berkeley.edu/workingpapers/139-06.pdf) finds woman to be MORE productive, look at page 41. In Kenya the same result (http://ageconsearch.umn.edu/bitstream/25693/1/cp060216.pdf), woman on farms are more productive than men. Just google "Difference in productivity between sexes" and I challenge you to find even ONE article that states that man are more productive than woman. So we can conclude that 1. Looks are more important for woman than men 2. Woman are generally more productive than men. whatelse can we find.

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    1. We have 2 business owners; one business owner is sexist and will continuously underpay the female workforce at 30% compared to man, the non-sexist business owner will pay equal wage. Therefore the sexist boss has STRONG INCENTIVES to hire MORE WOMAN who are willing to work for less than men. Given a large enough labor pool, he will find them. Is it fair? Given that woman are more productive not only does he get more output, but he gets them at a lower cost. So sexism does increase profitability...... in such a manner that woman pay for it.

      I follow the concept of fair wage, and given that we found that woman are more productive, they should get paid more!! So why does Koreas till have a 38% difference in mean wage when it should swing in the advantage of the woman. Because woman take the crap, that is why. Because woman feel guilty about not giving 100% at work, since they have to clean the house and be a good mom (social pressure).

      The only rational I can follow where woman get paid less is because they work less hours, but the wage per hour should be higher for woman than for men.

      What the aggregate shows is that there is a significant difference between man and woman (38% is not a joke!, imagine tomorrow you are a woman and get paid 38% less, just because). Korea is KNOWN for its patriarchial organized society, mostly due to our dear Confucious. If Korea wants to reach to the levels of Wealth Western countries enjoy, they would do better to follow a more egalitarian society.

      The problem is not the business owner, the problem is that woman do not feel that they can negotiate a higher wage because of stigma surrounding ambitious woman in Korea. How many of them are married in Korea (or Japan even!). haven't you read the articles of woman complaining they cannot find a man because they earn too much, they are too qualified, etc ....

      It is in the best interest of South Korea to let go of their patriarchal attitudes and let 50% of the population be treated like the other 50% of the population.

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    2. In regards to your use of people’s weight as an analogy, as I said, in my earlier example, when I used the lever and pulley system, I was merely using that as an example of one person being more efficient/productive than another (my original point was also gender-neutral). It doesn’t matter how a person proves to be more efficient – better technology, stronger upper body, better sales pitch; as long as the person is more efficient.

      I, too, have never seen a statistic where a person who weighs more gets paid more (though I have heard of overweight people being paid less).

      The study you pointed to, “Effects of physical attributes on the wages of males and females,” claims that physical attributes show no significant difference in wages for men, but it does show for women. I am not sure if I buy that. Of course, beautiful people get paid more – beauty has always commanded a high premium. That’s a no brainer. I just don’t buy the claim that it shows no significant difference in wages for men. Perhaps it was because this study used dated data (1993)?

      For this particular study at that particular time, assuming that the study was unbiased and accurate, I can see that as being sexist.

      However, in modern times, seeing how an increasing number of men are undergoing cosmetic surgery for the same reasons (at least job-wise) as the women, I think this is no longer a case of sexism but instead that of lookism, which I think is entirely different. Judging people based on their looks are found in nature, culture, romance, friendship, art, and major sectors of the economy. It’s part of evolution. So, though not without any reservation, I am reluctant to consider lookism as an unjust form of discrimination.

      Though I only read this study’s abstract, I am very curious as to how this data had been collected. Racial discrimination is difficult to prove as it is. I can only imagine that beauty discrimination is even harder to prove. But even if it were somehow provable, due to the subjectivity in the valuation of beauty, unless I missed something, there is no uncontested standard of beauty. So long as there is no such standard, no matter how wrong it feels, there is no objective way to say that beauty discrimination, even if it is proven to have occurred, is unjust. As such, any business should be left alone to practice or prohibit beauty discrimination.

      In the Berkeley study that you provided, I think the study proved the point that I was trying to make. It is stated in the summary: “Second, in age groups where women on average have extensive family obligations, the wage gap is larger than in other age groups.” This was one of the points that I made originally – “The Mommy Factor.”

      I have not read the study about the Kenyan farmers (you’ve given me quite the reading list). But I will do so in the not too distant future and reply.

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    3. And like I said earlier, I am NOT saying that women are generally less productive than men. By productivity, I mean three things:

      a) A ratio of outputs to inputs.
      b) The asymmetrical division of housekeeping and child-rearing duties, which forces most women to be less willing to work longer/inflexible work hours, etc., hence tending to make women less productive than men.
      c) The level of supply of the women’s labor in relation to the kinds of jobs that they are willing to work, and the level of demand for their services.

      Going back to the two business owners example, as we are working on the assumption that women and men are equally productive but women’s labor is priced lower, of course the sexist business owner has a strong incentive to hire the woman. That’s the whole idea. Like Milton Friedman said in the video that I linked originally, his choice to hire a man in place of a woman will come to him at a great cost. So the man has one of two choices to make: continue his policies of hiring only men at great cost (which will likely drive him out of business due to competition from his gender-blind competitors) or change his policies. If he chooses the first, the result is one less sexist. If he chooses the second, the result is less sexism (at least overt sexism).

      The assumption that you make that I disagree with is that the non-sexist business owner will pay men and women equal wage rates. I go so far as to say that a non-sexist business owner will have no problems with employing women (whose market wage rate, for whatever reason, is lower than men’s) but they are not obligated to pay more than the market wage rate. Just because a business owner is not a sexist does not mean that he is also a charitable angel.

      As for the 38%, that figure is the median difference between all men and women of all different kinds of jobs. That figure is not as important as people make it out to be, I think. Kind of like GDP or the KOSPI index.

      Now what you mentioned that I never did in my original post was about women’s lack of negotiating power for higher wages. I left that out deliberately because that lack of negotiating seems to be caused more by culture than anything else.

      As I have conceded to others already, nothing exists in a vacuum; that is true. But are business owners who are paying market wage rates to blame for a cultural problem? Of course that lack of negotiating power is one of the things that women have been socialized into accepting. “A good woman is not confrontational, she is demure and patient” and all that crap. As I have already said to others, if we want to talk about the reasons as to why women put themselves in the economic position that so many women found/find themselves in, that would be an ideal topic where we can find near endless evidence of gender bias, which I think either of us would hardly disagree with. But that, I think, is a different topic. In the mean time, cultural changes, which are the result of moral and philosophical changes, must precede political/economic changes.

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