Proponents of the opt-out phenomenon suggest that the dearth of women at the top of corporations is due to women leaving the workforce in favor of personal or family responsibilities. But economic studies have been unable to show any statistically significant evidence of opting out. To this point, opting out has been more of a rumor or an anecdote.
But new Vanderbilt research has identified a subset of women that is more likely to leave the workforce. According to the new study, women who graduated from elite universities are more likely to opt out than college educated women whose universities were not in the top tier. Author Joni Hersch, Professor of Law and Economics at Vanderbilt Law School, explained that she was initially surprised at the findings.
“More than anything, the reason I could detect statistical significance is because the effect was so strong. It was surprising that it was so strong, and it cut across degree levels.” In fact, it was strongest in women with MBAs.
Hersch analyzed an enormous sample – the 2003 National Survey of College Graduates – which contained detailed information for more than 100,000 college grads. She found that 78 percent of women who graduated from the most selective colleges were employed, compared to the 84 percent of women who graduated from other colleges and were employed.
Similarly, 68 percent of mothers who graduated from elite colleges were employed, compared with 76 percent of mothers who graduated from less selective institutions and were employed.
You wouldn’t expect women from elite colleges to leave the workforce. Graduates from these types of institutions are more likely to marry later, earn graduate degrees, and make more money over their lifetimes. All of these factors are likely to increase the rate at which people stay in their jobs. But in the case of women from top colleges, that wasn’t so.
Impact of Background
Hersch says she explored a number of possibilities for why women from elite colleges are more likely to leave the workforce. Her research suggested some potential explanations, which are related to the characteristics of people who are more likely to attend a top-tier university. She explained, “There is a high correlation between higher family income and going to an elite college.”
People from higher income families are less likely to accrue student debt, and therefore aren’t tied to the workforce in the same way as someone from a less wealthy background. At the same time, people from higher income families are likely to marry people who are also from higher income families. That too reduces the “need” for elite graduates to work, Hersch explained.
Even still, this reasoning would only account for a small proportion of the women who had opted out. Also likely, she said, “this is hard to test for, but the term an economist would use is ‘heterogeneity of preferences.’”
She explained, “If you are from the kind of background that sends its children to elite colleges, you go to college regardless of the expectation of future career commitment.”
For women from higher income backgrounds, there is more of an expectation that they will go to college whether they plan to enter and stay in the workforce or not. Conversely, if you are from a lower-income background, you are more likely to have made sacrifices like taking out student loans to go to college. Such women have made the decision to go to college in order to increase their chances of employment. Therefore, some time down the road, they are more likely to be still employed.
Opting Out or Having Options?
Hersch emphasized that the data do not indicate that women who attended elite colleges are leaving the workforce simply because they can afford to when they encounter inflexibility or discrimination.
“If you went to an elite institution, you probably have a greater menu of workplace options to choose from,” she explained. If being pushed out were a factor here, elite graduates could simply go work at a company with better policies and practices. But they’re leaving the workforce, at least for some time, which indicates that other factors are at play.
Companies may in fact be pushing women out of the workforce with unfriendly or undesirable working conditions, she explained, but this research shows that other factors are also important.
If this isn’t about inflexibility, then what can companies do to better attract and retain women from elite colleges? “The obvious answer is to pay them more,” she said. “That’s what an economist would say. But they’re already leaving high paying jobs. So it must have something to do with how companies select people to hire. As long as companies preferentially hire elite graduates, they will continue this dynamic.”
At the end of the day, she continued, the vast majority of women are staying in their careers. Opting out was only observable in a tiny segment of the population Hersch studied. The majority of women from elite colleges did remain in the workforce. “They like working, and would prefer that to not working. It’s not just about being able to afford not to work. It takes a lot of money to stay entertained if you don’t have a job,” she said with a laugh.