Economics: Scandinavia Offers Wage-Gap Insights

For decades, women have strived for gender parity in their wages. While the gap has decreased from 40 percent in the 1950s and ’60s in the United States, it has plateaued since the 1990s at about 20 percent in industrialized countries around the world. Even Scandinavia, which historically has had a lower wage gap and is regularly heralded for its generous child- and health-care benefits, is now on par with the U.S. “Gender convergence has stagnated quite a bit in many countries,” says Henrik Kleven, professor of economics and public affairs. “We were interested in understanding why.” 

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Henrik Kleven

Photo: Alka Mattoo

Along with Camille Landais of the London School of Economics and Jakob Egholt Søgaard of the University of Copenhagen, Kleven explores what’s happening with the wage gap using Scandinavia as a case study. In a National Bureau of Economic Research working paper, the researchers have broken new ground by tracing the problem to one source above all others: children. “Men and women evolve very similarly in the labor market, and then as soon as they have kids, women drop off immediately — and sharply — by 30 percent,” Kleven says. The researchers studied data from Denmark, which has rich social databases linking vital statistics with information about employment, taxes, education, and family relationships. 

Studying women’s income before and after the birth of their first child, they found that while Danish women’s wages do rebound slightly over time, they still level out about 20 percent below that of men, whose income stays the same before and after children. That difference accounts for nearly the entire wage gap between men and women.

Kleven and his colleagues posit that by bearing the brunt of child care, women tend to make more sacrifices in their careers than their male partners to maintain a flexible work life. Their data show that mothers tend to take jobs that pay less, require fewer hours, and in some cases leave the workforce altogether. Furthermore, they found that even when women stay in high-paid occupations, they are less likely to rise to managerial positions. Kleven speculates that all of these disparities are due to women choosing to maintain a more flexible work life in order to care for children. 

Women are essentially trading off family amenities for pay, he says. “In order to make it to the top of the labor market, you need to have a lot of face time with colleagues and managers and be extremely flexible in your ability to travel. Those things are hard when you have kids.” Kleven believes leave policies and subsidies for child care are not enough. “They must be combined with a shift in social norms toward men bearing more of the load of childrearing.”