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Friday, March 28, 2008

Things seem to be changing for the fairer sex in business


The New Gender Gap in Education-Becker


Until the mid 1960's, female high school graduates were less likely than male graduates to go to college, and female college students were far more likely to drop out than were male students. The direct reason for this difference was that many younger women married and then dropped out of school - mainly to start having families. Perhaps a more basic reason for this gender difference in education was that women did not participate in the labor force so much in those days, and hence many women did not believe a college education was useful.
All this has changed radically since 1970. Female high school graduates are now no less likely to enter college than are male graduates, and a much larger fraction of girls than boys finish high school. These two facts imply that considerably more women enter college than men. The fraction of college students who are female is further increased by the greater propensity of women who enter college to finish and graduate. About 57% of American college students are women, and they constitute about 60% of those who graduates. Similar trends toward making women a majority of college students apply to many European countries, and some Asian countries as well.
What explains this reversal from under representation of women in college to over representation ((see the related discussion in my blog entry for July 17, 2006)? One important cause is that marriage and child-rearing exert a much weaker pull out of school for women than in the past since women marry and start families at much later ages than 40 years ago. This increase in age at marriage is related to the decline in birth rates, and to the increased time that women want to spend working rather than caring for children and running households.
A college education is more attractive to women who spend greater time in the labor force since going to college significantly raises earnings of women as well as men. The financial attractiveness of a college education has grown sharply for both sexes since the 1970's because of the large rise in the earnings premium from a college education. The average hourly earnings of college-educated persons grew from about 40 % higher than that of high school graduates in 1980 to about 80% higher in recent years. This trend toward a much higher college education premium is also found in many other countries as well as the United States.
Although quantitative evidence on non-earnings benefits are more limited, the advantages of a college education in improving health, raising children, managing financial assets, responding to adversity, and in other areas of life have also grown along with the growth in the college earnings premium. This implies a widening advantage of a college education even to women who spend a significant portion of their time raising children and managing a household. In addition, the propensity of college-educated women to be married has increased a lot relative to the marital rates of women with less education, so that graduating college no longer significantly reduces a woman's chances of marriage.
Since these forces pushing women toward a college education have been strong during the past several decades, it is no surprise that a much larger fraction of young women now enter and complete college than a half century ago. This does not, however, fully explain why women are more likely than men to be in college since most of these forces have been just as powerful for men, and college-educated men still spend a larger fraction of their time working in the labor force than do college-educated women.
An important reason why women not only closed the education gap with men, but also changed the direction of that gap, relates, I believe, to the better performance of women in school. The average grades of women at every education level exceed the average grades of men, while the variation around the average is larger for men. Persons with low grades find school unpleasant since their teachers criticize them, and they come to believe that they are failures. Since many more boys than girls in high school have low grades because both average grades are lower and the variance in grades is greater for boys, more boys than girls find high school unpleasant and drop out before graduating. Dropouts truncate the grade distributions of graduates at the lower end, so that average grades of boys who graduate high school are closer to the average grades of girls who graduate than are the averages for all boys and girls in high school.
The same process operates at the college level. Men have much lower grades in college and find the experience less pleasant, so they drop out of college in much larger numbers than women, and are much less likely to graduate. That many more men than in the past continue on to college after high school indicates that they are aware of the rise in financial and other benefits from college. That they drop out of college in large numbers presumably indicates that they are either discouraged by their low grades, or they just do not like being students.
Why women at all ages do better in school than men is not so easily understood. It is unlikely that women do better mainly because they expect to remain in school longer- this is causation from remaining in school longer to better grades- since women had better average grades than men even when they were more likely to drop out of school. One line of explanation argues that women are more diligent students, less rebellious, and more docile students. Whatever the explanation for the remarkable shift in college attendance rates of men and women during the past 40 years, this shift is likely to have major implications for future changes in the gender gap in average earnings, the fraction of heads of business that are women, and other measures of gender differences in achievement.



By Gary Beckner and Richard Posner




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