Friday, February 23, 2007

Gender Income gap: why women earn less than men?

It is widely known that women earn less than men for the same job. Academic research, it is also extensive enough to support the notion that any income difference between men and women ,can be explained by different factors and variables ,each one of them related to one another such as education, family obligations, social backgrounds. But there is one key variable which count deeply in any prospective analysis for future on the job performance, and expected productivity: men can compromise themselves with the labor force more actively than women, because very much of the burden of raising a family( to have a child, initial years of mother attention) looks like a women task, at least those nine months that nature impose upon them to sustain unborn child life. It follows that in such a case, employers discount that expected on the job productivity difference against women(lower for women )usually paying at most one third (30%)less than men .The theoretical support for that decision is in the Marginal productivity theory, which states that expected return for hiring a productive factor must be equal to its cost ,leaving all others variables constant.
No matter the economic justification, the first question arising is :Is it fair for women being paid less, just because the expected productivity is lower when there is a period of time she is out of labor force ?; after all, she might recover that productivity losses by extra working hours. The problem still to solve, is that it is hard to find perfect matching between the worker abilities who is out with the worker abilities who is in, and even though there are head hunters agencies to do the job of finding the best worker alternative, it imply additional cost for firms, such that women must paid that cost with lower wages. In the men ´s case, they paid that cost with variable wages.-
Thus the real issue for women fair wage, is on the greater flexibility of women jobs. This means that they can work at home, which with technological support currently available is quite sure is the way jobs are going to be designed in the future. Alternatively, they can have part time jobs, flexible enough to make sure productivity levels are not severely affected while they are absent . It is all about more flexible labor market.-
Unfortunately , labor market flexibility discussion, has been focused exclusively from the wages levels point of view, specially the wage earned by men. Women wages ,and women labor condition ,seems to be aside of the matter. How can be explain that bias ?.
In European countries, women labor force participation is well above 60 %, So it is in the United States. Advanced countries seems to have become equally inspired, concerning jobs opportunities. In some Latin America countries, women are still considered for domestic activities and the labor force participation is below 50%.These differences, also count as an explaining factor for the bias in the labor market .Women are a minority with a weak capacity of organization and representation, which make them more vulnerable. The measure of that weakness is the income gap .

Friday, February 09, 2007

The new global uncertainties:Defining globalization frontier(II)

The key question is why such global uncertainties do not affect global economy growth, or why defining globalization frontier does not affect either global growth , even though it seems that the global politics is currently not well connected with global economy .
Although It is hard to find answers to these questions I will try some of them :
a.- There is a trustable global trade institution ,capable of dealing with tough issues such as protectionism ,agricultural subsidies and unfair trade practices, such that global free trade will be applied sooner or later ,all over different kind of products .
b.- There is strong perception that capital flows are free from restriction, around the emerging markets economy .At the same time, the most important financial places count with a new currency (the euro),such that the portfolio diversification allow for greater investment opportunities and higher investment volumes. This higher investment level, push upward global economic growth prospect.-
c.- There are new players (China and India),on key productive and services sectors on the global economy, capable of maintaining its growth leadership at least for the five years to come,(average economic growth above 6,5 %)
d.- There is transition going on from an oil resource based economy, to a knowledge based economy, which can sustain economic growth while oil prices are above historical levels.-
e.- The eurozone is moving ahead to be the dynamic partner global economy needs, which means global economy growth (new players included)opportunities ,are somehow rotating from the US based industrialized economy type of growth .-
If all of the previous factors apply ,it follows that global uncertainties are not economics one by nature , but rather political and geopolitical . Thus the interesting thing, is that almost nobody doubt about free market global economy model as a viable alternative to induce global growth ,which by itself move growth expectation and investment upward . Sure, this could be considered to be the right interpretation of recent economic history But is it enough?. After all we have the challenge of global warming, which might also affect economic growth like a new constraint .
A second line of reasoning might goes this way: There is a lot of global endogenous factors arising from the greater availability of global information throughout internet, and global news media . Higher level of business opportunities information ,specially market trend information, make possible to take business decisions with a better risk scenario analysis, which may compensate all the other variables still unsolved .In other words, the five factors previously mentioned have created a set of special condition, such that creativity and innovation forces might goes on their own ,no matter the political and geopolitical implications of current state of affairs .-
The implications of this line of reasoning would be that we have global economic growth despite new global uncertainties, no just because of the new big players coming in, but because of more information available to detect business opportunities in such way that it would not have been possible without internet, fostering global endogenous variables to take an active role to explain global economic growth. It seems that there is a combination of exogenous and endogenous variables, which can explain global economic growth even with the new global uncertainties. Does it implicate that it does not matter how the new global uncertainties are solved ?. Quite on the contrary, it means that the implication of such global growth is still unknown , the dynamic of growth is one thing, the direction is another ,beacuse the is no global frontier defined yet ,therefore this is the challenge to cope with.-