Friday, December 24, 2010

Labor Market Gender Arbitrage: MNCs Profiting From Sexism By Hiring Female Talent in S. Korea

"Working women in South Korea earn 63% of what men do. Not all of this is the result of discrimination, but some must be. South Korean women face social pressure to quit when they have children, making it hard to stay on the career fast track. Many large companies have no women at all in senior jobs. This creates an obvious opportunity. If female talent is undervalued, it should be plentiful and relatively cheap. Firms that hire more women should reap a competitive advantage. And indeed, there is evidence that one type of employer is doing just that. 

Jordan Siegel of Harvard Business School reports that foreign multinationals are recruiting large numbers of educated Korean women. In South Korea, lifting the proportion of a firm’s managers who are female by ten percentage points raises its return on assets by one percentage point, Mr. Siegel estimates.  

South Korea is the ideal environment for gender arbitrage. The workplace may be sexist, but the education system is extremely meritocratic. Lots of brainy female graduates enter the job market each year. In time their careers are eclipsed by those of men of no greater ability. This makes them poachable. Goldman Sachs, an American investment bank, has more women than men in its office in Seoul."

MP: Great example of how competitive market forces and the "invisible hand" of profit-seeking firms can correct gender discrimination in the labor market by taking advantage of it and profiting from it.  And it's probably a faster and more effective solution than costly government regulations and legislation.    

HT: Bill Connerly


At 12/24/2010 9:48 AM, Blogger VangelV said...

It seems that the markets can work to reduce the effects of bias better than progressives or government programs. As their foreign competitors become more profitable and gain more market share the Korean firms will have a choice to make; end discriminatory practices or keep getting less relevant.

At 12/25/2010 1:35 AM, Blogger NormanB said...

This is the same 'game' that the New England Patriots use to roll over the rest of the NFL. The other teams love offensive linemen that weigh >330lbs and they don't even look at the lighter players; that's who the Patriots get. So, most teams get bottom of the barrel (in terms of athletic talent) behemoths while the Patriots almost have their pick of tremendously talented smaller players. The result, if you watch the Patriots is that their qb Tom Brady has lots of time to throw and New England wins.

At 12/25/2010 10:57 AM, Blogger sethstorm said...

Or it's one more reason not to use such a slavery-inducing system in education. South Korea's politically slanted, flawed tests (that predestine measures of freedom or slavery) are far from "merit". The only lesson learned here is to kill such programs.


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