fatvegan

I've wanted to do a study on the relationship between the proportion of female employees in a company and the company's return on assets. There are so many problems with attempting to determine wage discrimination against women. Last year I read a pretty convincing study suggesting that gender-based wage discrimination didn't really exist. Women earnt less for the same sorts of jobs, but not because they were women. It's always going to be very hard to measure things like "how bad do you want it?" I would guess men tend to want it badder, but I don't know and I don't know how I would find out.

So I thought about other ways of measuring discrimination. Ultimately it's a violation of the efficient market hypothesis. In theory, if women earn less for providing identical skills, then businesses that employ them should make more money. You can really look at stock market returns, because at that level the profits are abstracted. If a business earns higher than normal profits for any reason, people will invest and the rate of return will eventually fall to a normal level. Which means you have to look at the return on assets, and importantly the assets per employee. That's because companies that use assets well will be given more assets. So you need to look at how well assets are used by each employee. If women are discriminated against in wages, then they'll utilise their assets better than men.

I just found an article that talks about a study that's related. Except it's look at female business owners, rather than female employees. It found that the return on assets for female-owned businesses was that same as for business owned by men. Which doesn't tell you that women aren't discriminated against, just that their management style isn't any more profitable. Their style might even be better, and their employees might be happier and so on, but they don't make more money. Or, use their assets better. However, they didn't look at return on assets per employee which I think is a more significant figure.

I don't think there is a lot of doubt that capital markets are pretty efficient, but that doesn't necessarily mean that labour hiring practices are efficient. I'm inclined to think they are, because the temptation to exploit any inefficiency would be too great. If there was discrimination, then you'd be a fool not to try and hire only women. Which would eliminate the discrimination pretty quick.

But I'd still like to do the study.