WHY WOMEN EARN LESS THAN MEN?

She has the same qualification as her husband; they both stay in the same region and work in the same sub sector but her average earnings over time will be lower than that of her husband. It is the reality of wage gap differential between men and women. It becomes clearer when we pool women’s earnings together and compare with their male counterparts.

Average part-time female workers in UK in year 2000 earned 8% lower than what their male counterparts were earning, according to Institute for Employment Studies for the Women Equality Unit. Evidence however suggests that the gap has been reducing over the years.

Jeremiah Cotton stated that there is no doubt that there is a sizeable wage differential between men and women, the controversy however has been in explaining factors causing these differentials.

Actually, there has been no shortage of explanation. Going through some of the literatures, three main explanations are often provided (conventionally):

i.         Human Resources Factors (Skills, Education, Location, Working     Hours, Sector etc.)

ii.         Treatment Issues (Discrimination)

iii.         Estimation Errors (Use of Inappropriate Techniques for Estimation)

Those who explain the reason why men earn more than women on human resources factors believe that men averagely tend to be more skillful and productive than women.  The second group however refutes the excuse that men are more skillful or productive than women. They posited that, it is the way women-issues are treated at the working place that translates into them earning less than their male counterparts (Discrimation). The third group however blames the observed wage-gap differential on estimation error. This might make the wage-gap more of perception issue than reality.

To verify this; we analysed a panel data comprising of 71,561 records of working individuals observed between 1991 and 2006 by British Household Panel Survey

The raw differential over the period shows that women average weekly-wage is about 10.81% less than their male counterparts. Those who are married have the tendency of been less paid by about 10% and those with kids increased their probability of been less paid relatively to their male counterparts by 4.79% for every number of child they have.  However, women that worked in the Northern part reduced the gap by about 3.77% while those covered by Union reduced the gap by about 7.74%. It also shows that such gap becomes negative for women in Distributive Sector and Banking and Finance Industry. The gap generally declines as women obtain higher education and as they gain more experience.

After a series of tests on a comprehensive wage model; Education, Experience, Region, Industry, Union, Number of Children among others significantly affect what an individual earns but to explain the difference in what women and men earn, we decomposed difference in wages to a proportion due to discrimination in the labor market and other proportion due to differences in skill between the two groups. Decomposing these differentials using Oaxaca variant decomposition shows that skill and experience only explain about 9% of the hourly wage differential and 5% of weekly wage differentials.

If skills and experience only explain 9% of why women earn less than men, there are certainly other unexplained factors responsible for such a difference. The shocking realization is that these unexplained factors are significant.

Naijanomics however, concludes that it will be wrong to believe that wage-gap differential exists because of inappropriate estimation method (the raw data shows it exists). Neither does the explanation that it is the discrimination against women (the data used is not from Afghanistan) nor difference in skills (women have been proven to perform better in some analytical jobs than men) explain why women earn less than men. It is rather the non-financial cost of “MOTHERING” a home.

There are lots of responsibilities women handle that are not accounted for in the National Income Accounting. Women engage in so many non-monetised physical and mental engagements in the process, or in anticipation of “mothering” a home that socio-economic models find difficult to quantify.

If the cost of mothering someone like me, and the entire home is dollarized; women will actually earn more than men. Skills and education aside, those economic activies they render that are not paid for make women earn less.

This is written in recognition of unpaid-services, working mothers render to their families that invariably translate into them not fully earning their optimal economic income. (I need to pass a THANK YOU CALL to my mother)

 

Note: Initial data analysis was done as a postgraduate presentation at University of Manchester (Applied Ecoometrics, 2009) with Nkenchor Igue and Solomon Otajonor.

 

THE OLYMPIC EFFECT AND THE NIGERIAN EXPORT GROWTH

IOC: Why complaining of over-reliance on oil when you have over 100 exportable products? Have you thought of using the “Olympic Effect” to increase your export level of non-oil produce, because evidence has shown that hosting a mega-event boosts export by over 20% for host countries?

Naija: You know that these events often end up with large cost outlay, which are difficult to justify. Neither the income earned, during the event justify the cost nor the legacy of over capacity-velodromes and aquatic centres that no one will use thereafter make sense. My people also understand that, it will just be another avenue for your companies to drawdown our foreign reserve and for my boys to also earn their own commissions.

IOC: But economic benefits of hosting mega-events go beyond the financial derivatives. If you really want to send signal to international constituencies on openness of your economy, you have to consider harnessing the Olympic Effect, even if it is a World Cup. You can adopt the South African style; despite failing to win the Olympic bid of mid 90s, got the world cup hosting right 13 years later and you can see how well that has significantly boosted tourism in South Africa.

Naija: But it is too early to conclude that it is the World Cup effect that is encouraging tourists to South Africa these days. I am of the view that, the global financial melt down is making a lot of people to look at vacation somewhere outside the usual places.

IOC: Don’t underestimate how significant the effect of a mega event can be to the hosting nation. Seoul game was the instrument used to improve international relations between South Korea and the Soviet Blocks and to raise awareness for Korean products. Have you wondered how much openness and export boost to Chinese products since 2001 when the Beijing Olympic was awarded? The spontaneous changes to Italian economic scenario (Currency Convertibility, Treaty of Rome, Creation of EEC, among others) the moment Rome Olympic was awarded in 1955. Look at Mexico 1986 World Cup (trade liberalisation resulting into joining GATT).

Naija: There seems to be something peculiar to all these countries that ended up hosting these mega events that one cannot conclude, it is because they hosted mega event that their export increased. Besides, countries that unsuccessfully bid for those events still have evidence of export growth. Switzerland lost hosting right of 1948 Olympic to London but there was indication that export grew after then even without hosting the summer event (Amsterdam 1952, Belgium 1964, among others).

IOC: Yes, those who bid but did not win the hosting right still end up experiencing increase in their exports because Olympic effect on export is attributable to positive signals countries send during the selection exercise rather than the actual holding of the mega event.

Naija: Ooooh, that implies that we can achieve same, by just bidding without hosting?

IOC: Yes countries can boost export by sending positive signals during bidding but that may still be devoid of resultant openness that the actual event brings. It may sound so complex to you now but when you look at the Gravity Model of International Trade employed by Mark and Andrew (2011) used to estimate the permanent export effect the Olympic effect has, you will appreciate better.

Naija: But Okonla Iweaje, once mentioned that boosting export is easier to achieve when trading countries speak same language, use same currency, share borders and have same colonial master instead of hosting jamborees.

IOC: Those are standard trade determinants, which do not take away the permanent Olympic effect on export of hosting countries. I think, instead of lamenting over poor export in the face of abundant exportable products, you should consider using the Olympic effect to stimulate your export.

GEJ: OK. I will instruct Okonla Iweaje to set up a new committee for Abuja Olympic 2020 and an addition made to our 2020 goals. We can copy the non-oil export-led growth of China if hosting the Olympic has been proved to boost export.

Naijanomics: We actually have some reservations for the conclusion because the unobserved heterogeneity in the model was significant. However, there is something no one can deny peculiar to those countries: ASSURANCE OF SECURITY.

Tell Naija to first de-market the weekly slaughter of innocent women, children and hapless men of Plateau before we start talking of “Blood Coffee”.  Who will harvest Gum Arabic in Maiduguri, where police go to work with no assurance of returning because Boko Haram has more bombs than police has stocks of tear gas?

Who will dry and split the ginger from Kachia; process the hides and skin from Kano; Sheanut from Minna when old neighbours suddenly become sworn-enemies? Armed robbery flourish on the highway of one side of river Niger and kidnapping has high returns on the other side of the river?

Lack of security does not only result in loss of lives and properties but it retards growth and renders functional strategy ineffective in stimulating the economy.

 

Aim was to summarise “The Olympic Effect” by Andrew, K. and Mark, M in a conversational tone, but at the same time attend to one of the topical issues.