Claudia Goldin and measuring the experience of women in the labor force

 

Congratulations to Claudia Goldin, the 2023 recipient of the Nobel Prize in Economics. Goldin was cited “for having advanced our understanding of women’s labour market outcomes.” The press release from the Royal Swedish Academy of Sciences highlighted that she “provided the first comprehensive account of women’s earnings and labour market participation through the centuries. Her research reveals the causes of change, as well as the main sources of the remaining gender gap.” Goldin’s work has shown how women’s historical contributions to the labor force frequently went unmeasured, illustrating how what is not counted often ends up not counting in policy discussion.

As a Lecturer at Auckland University in New Zealand in the late 1970s, I encountered an example of how official statistics could conceal women’s labor market experiences. At that time, unemployment was calculated as the number of workers who had officially registered for unemployment benefits. However, unemployment benefits were effectively limited to heads of households. Secondary workers were not eligible for unemployment benefits and therefore had no incentive to register if they lost their jobs. And any unemployed worker who failed to register disappeared from the measured labor force. This approach meant the true extent of unemployment was understated, and the understatement was likely to be largest among women as they were less likely to register because they were more likely to be classified as secondary workers and not qualify for unemployment benefits. 

I attempted to overcome these measurement issues to obtain a more inclusive estimate of New Zealand’s unemployment rate. The results were published in 1978 in the New Zealand Economic Papers (“Unemployment in New Zealand: An Errors in Variables Approach to Measuring the Number of Unemployed,” NZEP, 12:1, 13-48). Based on data from 1965-1976, my estimates suggested New Zealand’s official unemployment figures captured about half of total male unemployment but only a tenth that of females. I also found the female unemployment rate over the estimation period was roughly three times the rate for males. 

With the election of David Lange’s government in 1984, New Zealand entered a period of economic reform, not least of which was the Reserve Bank Act of 1989 that established formal inflation targeting. And in 1985, New Zealand introduced a household survey to measure labor participation and unemployment so that their statistics could be brought in line with international best practice, making it no longer necessary to rely on the admittingly crude approach I had to use in the late 1970s. 

From 1988 to 2001, the female unemployment rate was less than the rate for males. Since then, the reverse has been true, though in general, the unemployment rates for both groups have been similar. Importantly, these data are now subject to less systematic measurement bias and therefore provide more accurate, and useful, information on the experience of women in the New Zealand economy.