Why modern capitalism hurts women—and why that needs to change

This book solves a puzzle that would only occur to an economist. The puzzle is why we should think of the gender pay gap as a problem. Since women earn less than their male equivalents, firms should be more likely to hire them. In a capitalist economy, therefore, any differences in pay just reflect different preferences.

This was, at least, the response of the Institute of Economic Affairs to last year’s pay gap data revealing that eight out of 10 firms paid men more. Move along, nothing to see here, said the IEA: it’s just women making different choices about education and childcare.

Vicky Pryce ruthlessly exposes this myth. The gender pay gap is endemic because there are too many market failures that keep it alive—from information asymmetries which keep women out of jobs that depend on networking, to the failure to value caring, to behavioural factors (implicit bias, for example) emphasised by economists such as Iris Bohnet. Only government intervention (proper childcare, flexible workplaces, gender quotas) can solve the problem. Echoing new ECB head Christine Lagarde, she argues that denying women equality in the workplace is not just a question of fairness but of economic progress.

At times, the book feels like a deeply personal story from someone who arrived in the UK from Greece with nothing and made it to the top in a male world. Anecdotes about similarly successful women add colour to the statistics, although it would have been nice to read more about the situation of less-skilled and lower-paid women.

Pryce finished the book before Esther Duflo jointly won the economics Nobel Prize in October. I hope she was cheered by the result, though it is only the second time a woman has won. A depressing indictment of modern capitalism, this book is a passionate argument for a way ahead.

Women vs Capitalism: Why We Can’t Have It All in a Free Market Economy by Vicky Pryce (Hurst, £14.99)