Monday, September 15, 2008

Recent Advances in Consistent Partisanship

Greg Mankiw's Blog: Fun with Statistics wrote:

"Princeton economist Alan Blinder says Democratic Presidents are better for economic equality between rich and poor.

Chicago economist Casey Mulligan says Republican Presidents are better for economic equality between men and women.

My [Greg's] take: These articles are completely persuasive, as long as you buy into the axiom that correlation=causation. Otherwise, not so much."

I cannot disprove Professor Mankiw's Blog interpretation of my recent WSJ article because I am not aware of any good explanation of why significant U.S. wage structure changes coincided with the political party of the U.S. president. But now we do know why the appearance of my article about gender equality coincides with the appearance of Professor Blinder’s article blaming widening inequality within gender on Republican leadership.

To see this, let us put political events aside for the moment. Economists have recognized that wage structure changes in the direction of gender equality have occurred at the same times that high wage men have gained relative to low wage men. Professors Card and DiNardo (2002, p. 742) called these changes curious coincidences. Professors Blau and Kahn found these changes to be paradoxical because they thought that wage inequality within gender should retard progress toward gender wage equality.

Professor Yona Rubinstein and I have recently (2008) shown how the basic economic logic of female labor supply – that heterogeneous women allocate their time and effort between the market and nonmarket sectors – implies that widening wage inequality within gender creates relative wage gains for women as it encourages able women to enter the workforce and encourages women generally to invest in market-oriented human capital.

Now let us turn back to the political events. Ever since I was a college student in the late 1980’s, I remember Democrats’ blaming wage inequality Republicans (first on Ronald Reagan, and later on Republicans generally). Professor Blinder’s piece is just the latest verse of a 20-year-old song. Once I (recently) appreciated the intimate relationship between wage inequality within gender and wage equality between genders – that the former (whether it came from Republicans or not) has created tremendous opportunities for women to magnify their value in the labor market – it became clear that the Republican blame for the former has to go with Republican credit for the latter. If Republicans are not entitled to credit for women’s relative wage growth, then they are not entitled to blame for the widening of the wage distribution among men.

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