MOSCOW CENTER FOR GENDER STUDIES

• Background
• Economic effectiveness of higher education for men and for women
• A. Income size
• Pensions
• B. The time period of receipt of income

SUMMARY

Background

Soviet Russia developed a particular system of public education: on the one hand, education was free for everyone, but on the other, a person achieving a high level of education did not receive significant economic benefit from his education. The system of higher education was also truly gender-neutral. Social surveys showed, regarding equal rights and opportunities for men and women, access to education was far more fair to women than many other aspects of life in the Soviet Union.

Over the last 10 years of economic reforms, the educational system, including higher education, has changed a great deal. The number of students at higher educational establishments rose by almost 40%, mainly because of in increase in women students, whose number has been rising faster than that of men in the past few years. In 1992-2000, the number of male students rose by 327,000 or 25%, while the number of female students, by 763,000 or 50%. Naturally this significantly changed the gender composition of the student body. Whereas at the outset of reforms, the share was 50.4% women and 49.6% men and fully matched the gender composition of the corresponding age group, at present we are observing a feminization of higher education as women now constitute 56% of all students, and men only 44%. This large proportion of women students is one of the highest in the world.

The proportion of women among the students in Russia would be even larger if it were not for the "army factor." In Russia, this factor significantly distorts the picture of the young men's need for higher education or, to be more precise, motivates young males at age 18 to extend their education as long as possible. A significant number of young men of draft age do their best to avoid army service. The easiest way to do this legally is to use the draft extension the state grants to students.

In the years of reforms, the funding of higher education also changed. While the real volume of government expenditure on education fell (decreasing annually per student 5-10%,) private individual spending on education rose significantly. 96% of the increase of the total number of students was in for-fee education. In 2000, 49% of the students at state higher educational establishments were accepted on payment-in-full terms. Thus one in four students in the system of state higher education is paying the full cost of their training. What is more, the adopted educational reform legislation envisages a further increase in the number of paying students.

Government statistics unfortunately do not include a gender breakdown of the students studying on a for-fee and on no-fee basis. But in view of the fact that it is in the predominantly "female" professions where fees were introduced, (in the 1998/1999 academic year, women constituted 67% of all students training in sociology and the humanities and 70% of those doing economics and management), while the traditionally "male" professions remained "free" (men constitute 74% of the students who train in machine building, 78% of the students in radio engineering, etc.), it can be assumed that for-fee education has affected mostly women. This means, in our view, that the expenditure of federal budget money allocated for education is becoming more and more gender asymmetric, and not in favor of women.

An important factor that complicates women's access to higher education is growing discrimination on the part of educational establishments themselves. D.L. Konstantinovsky estimates that the gender factor alone reduced the chances of the female applicants to higher educational establishments by 2.4% in the 1960s, by 6.2% in the 1980s, and by 12% in the 1990s.

Large-scale for-fee education in a country where the income disparity between the top and the bottom deciles now reaches 30-40 times (!) raises both the issue of equal access to higher education as well as the question of its economic effectiveness for each individual. Our research shows that over the past reform years access to higher education has become less equal for various socio-demographic groups. The crucial circumstance is a radical change in the factors that determine equality of access to education. While in socialist times the primary factor was ideology, today it is money.

At the same time, gender analysis of access to education in Russia shows that the situation is still relatively fair to women, although a sociological survey conducted in 1997 in the city of Rybinsk indicated that one-fifth of the women and one-sixth of the men would not agree with this. However our research did not confirm the commonly held hypothesis that there is a difference in the Russian families' attitude to girls' and boys' education. More than 80% of the respondents in the Rybinsk survey had no gender preferences when deciding whether to pay for their children's education. Only 3% of the respondents noted that, should they find them-selves short of money, they would pay for the sons' education, and 1% chose daughters.

Economic effectiveness of higher education for men and for women

The main purpose of our study was to examine the impact made by education on the employment status of men and women and to assess the economic effectiveness of their individual private investments into education during the time of Russia's transition to a market economy.

In the classical model of investment in human capital, material return from individual cash investment in education is defined as the difference between the lifelong earnings from higher wages received due to the earners higher educational level, and the costs incurred during the period of training (fees, textbooks, living costs etc).

Our research shows that in present-day Russia, the material return from higher education differs significantly for men and for women. The only equal factors are the educational costs. Lifetime earnings and hence material return on investment are not equal as they were acquired in the employment sphere, where there is growing gender discrimination.

Our study examines in detail the issue of effectiveness of private investment in higher education in the context of Russia's economic, social, and demographic realities, and shows how a significant gender-based "effectiveness gap" has appeared.

Educational costs
In Russia, boys and girls pay the same fees for their education. Fees differ not by sex but by the type of educational establishment, its location, and the nature of the profession for which the student is training. Our study showed that provincial universities charge $100 to $500 for an academic year while in the capitals this figure reaches $700 to $7000. In comparison the government budget allocates only $250 to $350 a year (on average) for the training of one non-paying student at a state higher educational establishment.

Economic Benefits arising from education
Benefits (material gain) from higher education arise only in the presence of direct positive correlation between the level of labor remuneration and the level of education. The amount of material gain is calculated from the differences between the lifetime earnings of persons with different educational levels. It will vary with a multitude of factors, the most important of which are wage and pension size, the length of paid employment and the time and length of retirement. Moreover the significance of these factors is gender-differentiated; consequently, they have different impacts on the effectiveness of private investment in education for men and for women.

A. Income size

Wage or salary size
It should be borne in mind that if there is a direct relationship between labor remuneration and educational level, then the stronger the relationship, the higher the effectiveness of investment in education (other variables being equal); and the less variation in wages or salaries on the basis of gender, the less significant will be the difference in the effectiveness of these investments for men and for women.

An important characteristic of labor remuneration in today's Russia, as compared with other countries, is its extremely wide variation. What is more, throughout the reform period wage disparity has been steadily increasing, and one can say that there is an unprecedented increase in earnings inequality. Even the official statistics supplied by the RF Goskomstat state that the decimal correlation of the average wage was 23.4 times in 1994, 25 times in 1997, and 32.1 times in October 1999.

The problematic situation created by the excessive growth of wage disparity in Russia is further aggravated by a rapid fall of real wages throughout the period of economic reforms. As a result, in 1999 real wages were was less than 30% of the 1991 level. And only in January 2000, for the first time, the RF Goskomstat recorded a rise of real wages (by 22.3% in relation to January 1999).

Our research showed that in Russia, employees with a higher level of education have always received higher wages and salaries. Thus, the wages of workers with a secondary education constituted 60-70% of the wages of a person with a higher education. But this difference is far smaller than in the economically advanced countries.

In the context of this study, it is important to observe that in Russia, where equal pay for equal work was established by law in Soviet times, women were and still are far behind men in earnings, and this gap has been widening in the past decades. While in the 1980s, the wages of women constituted, on average, 70% of men's, by the end of 1999 this figure had dropped to 52%, and in mid-2000, to only 50%. Obviously this process is still under way. Thus during the last ten years, women have become one of the socio-demographic groups most affected by growing wage inequality.

In all countries women lag behind men in regard to wage levels, although to varying degrees, but in practically all of them, this gap is narrowing as educational levels rise. The reverse trend is observed nowhere else, except in today's Russia. For example the 1988 survey from the PLMS (Russian Longitudinal Monitoring Survey) showed that for the seven identified educational levels, from "no secondary education" to "higher education," a woman's average wage varies from 53% to 66% of a man's. Only the small fraction of women who have completed a postgraduate course enjoy practically the same salaries as men with the same education, i.e., 94% of the men's. And, whereas in the 1980s the gap tended to grow narrower as the educational level rose (as was happening in the advanced countries), this trend can no longer be observed.

In other words, at present, an increased educational level does not even out the differences in the wages of men and women in Russia. This conclusion is especially important because it is the raising of the educational level of women that is usually regarded as the best way to make men and women equal not only in the labor and employment market, but in all spheres of life.

In modern Russia, the graph of the profile of age/wage dependency shows a convex curve with the maximum wage values at ages 40 to 50 and a subsequent sharp decline in the preretirement ages. This decline is so significant that the wages of older workers are in fact equal to those of the persons who are only at the beginning their careers. This is true of both men and women and regardless of educational level. In economically advanced countries, another profile prevails: wages steadily increase with age, and the rise merely slows down in the preretirement ages.

Pensions

In socialist Russia, women's old-age pensions used to be significantly lower than men's. According to the findings of a study conducted by ISEPN, RAS, in the town of Taganrog in 1989, the disparity was 10 to 40% (depending on age). The chief and practically the only factor that accounted for this difference was the gender inequality of labor remuneration.

At the beginning of radical economic reforms, the high inflation rate caused a fall of the pensions' real purchasing power to a point at which even the largest pensions did not ensure minimum subsistence. The government could not afford to index pensions thus maintaining their necessary differentiation. In 1992, the government was forced to establish the same size workers pension for all pensioners, subject to regular indexation. This removed the dependence of pension size, on the size of past salary and length of service.

Subsequently, repeated attempts were made to restore the dependence of a person's pension on his/her labor contribution. As a result of years of work, there appeared a logical enough system (not always a socially just one) of multifactor calculation of pension assignment, which brought back differentiated pensions. As might be expected, the differentiation of pensions on the basis of gender was also restored.

Today as before, women in all age groups are behind men as regards the size of oldage pensions, which still vary between 60 and 90% of men's. In future, as actuarial calculations show, the disparity may increase with the introduction of a three-level pension system (basic, insurance, and cumulative).

B. The time period of receipt of income

The time of income receipt can be divided into two periods, the time of paid employment and the time of drawing a workers old-age pension. The length of both these periods is not the same for all workers; their duration is formed by many factors which include: longevity and health, the state of the economy, the labor market situation (specifically the unemployment rate and the degree of discrimination), the legally fixed limits of employable age and socially useful breaks (e.g., maternity leave, active army service, etc.), the gender stereotypes of relative participation/non-participation in paid employment, the demographic situation (the birth rate, longevity, disability rate, etc.), and others. In this study, it is significant that the values of many of these variables are different for men and for women and for persons with different levels of education. Let us consider some of them.

The duration of paid employment

Length of service is not the same for men and for women, both officially and factually. The official differences are determined by the legally established limits of employable age: its outset is the same for both genders, 15 years old, while the retirement age is not the same, 55 years for women and 60 years for men.

The differences in the actual length of service are determined not only by the limits of employable age but also by differences in the employment status of men and women, the scope of discrimination in this sphere, gender stereotypes that determine the economic rate of the use of the leave granted for caring for small children, and the demographic situation including the births, mortality etc.

This study was the first attempt to conduct a detailed analysis of the dynamic (1992-1999) of such fundamental indicators as economic activity, absence of economic activity for men and women, employment, with an analysis by groups identified on the basis of the educational level. Our data showed that, even though in the reform period men and women were losing employment at a comparable rate, the quality of women's employment deteriorated much more than men's. (Women continued working but their jobs paid less and less.) We also analyzed such phenomena as segregation (vertical and horizontal) and estimated the extent of men's and women's shadow employment.

The main factors determining differences in real length of service for men and for women, which varied with the educational level were also examined.

It was found that real unemployment has similar scope (and, consequently, a similar impact on the length of paid employment) among men and women with the same level of education. It is, however, much more widespread among the groups with a lower educational status. That is, unemployment reduces the lifelong material gains of persons with a low educational standard more than of the others.

Ceasing to be employed outside the home, which implies ceasing to (temporarily or permanently) receive an income from employment, is more common among women than among men. Women with a higher educational standard are less inclined to give up their careers.

Socially useful breaks in paid employment

Under the RF Constitution (Art. 59, paragraphs 1 and 2), service in the Russian Army is mandatory only for men. What is more, in accordance with the prevailing gender stereotype, namely, that the man is the breadwinner, army service is, for many men, the main reason for a career break. The Russian legislation currently envisages that each man of draft age in normal health must serve one or even two years (depending on the level of military qualifications) in the army. For most young men, this means that the outset of their working careers after graduation from an educational establishment is postponed by two years.

Another major factor affecting a person's lifetime length of service is the employee's use of the three-year leave granted after the birth of a child, most of which is unpaid. At present this privilege for employees with family obligations is used mostly by women. Men rarely use this leave. Each time a woman stays at home to care for a child her working length of service is reduced by three years.

The data provided by the RF Goskomstat does show, however, than in the past few years Russian men are beginning to use the so-called "maternity leave." While in 1996, there were no men among the employees using this leave, in 1998 their share was 1%, and in 2000, 2.3%. Men more frequently use the later part of the leave, that is they stay at home to care for children aged 18 months to three years. Among those using this part of the leave, the share of men reaches 3.2%, while the proportion of men using the partially paid leave granted for caring for very small children (age 0 to 18 months) was only 1.6%.

The number of breaks in employment caused by the birth and rearing of children, the distribution of such breaks, the time when one stops working, and, in sum, the average length of service are strongly affected by demographic processes. The current unprecedented drop in the birth rate in Russia (from 1990-1998, the number of second children down by 1.81 times, third children, 2.12 times, and fourth children or more, 2.18 times) reduces the number of breaks in women's paid employment and is gradually bridging the gap between the length of men's and women's paid employment time. Moreover the differences in the reproductive behavior of women with different levels of educational have recently disappeared. Thus the birth rate factor has begun to have an equal impact on the length of paid employment of all women.

The duration of retirement receiving a pension

The time on a pension is currently higher by 8.8 years for women than for men (22.9 and 14.1 years respectively). This large disparity is determined by both the difference of age at retirement and the age at death. In Russia, men's short average life span is striking: in 1999, it was only 60 years, that is, an average Russian male survived only to the retirement age. Women live much longer. In 1999, their average longevity was 72.2 years.

At the same time, studies show that the longevity indicator correlates positively with the educational level. The latter is a stronger factor in male than in female mortality. For men, each year of schooling and training reduces mortality by 9%, and for women, by 7%. An increase in the level of education evens out the difference in male and female longevity rates. In terms of economic returns from investment in education, the greater longevity of persons with a higher education means that they more often make it to retirement age thus not only draw higher incomes and pensions, but do it for a longer period as compared to persons with a secondary education.

The model

As part of our project, we built an economic-mathematical model to estimate the effectiveness of private individual investment in education, taking into account the following factors: the cost of preparing for the entrance examinations, the costs arising from attending a higher educational establishment, the employees' total lifelong wage or salary (broken out by gender and level of education), the presence of breaks in employment (active service in the Russian Armed Forces for men and maternity leaves for women), pension size, expected longevity (differentiated by gender and educational level), and age at retirement.

To estimate the economic return from investments in education, we used a wage model which involved examining three types of professional careers: "pesimistic"(wages increase only with inflation), ''expected'' (throughout their working lives employees double their wages only through career advancement), and "optimistic" (the wage trebles through career advancement). We also examined the gender-based wage differentials for four levels of education (secondary, vocational school, higher education, and completion of a postgraduate course).

Individual expenditures for education and its correlation with wages were established in the model based on the findings of a special survey of first-year students at Moscow Lenin Pedagogical University (conducted as part of this project) and RLMS data.

In general the criterion of effectiveness of investment in education is the excess amount of income over expenditures. But since the main purpose of our work was to make comparative calculations so as to estimate the asymmetry in the economic effectiveness of investments in higher education for men and for women, the calculations in the model were not conducted for all the persons getting an education but separately for different socio-demographic groups. Observing the different groups, comparisons were made of their lifelong total incomes and their material return from investments in education. (Included were men and women with different types of careers, different number of professional career breaks, and different educational levels). We developed and used the following criteria of the effectiveness of investments into education:

• ratio of lifelong incomes to material returns from investment in education for the two genders;
• ratio of lifelong incomes to material returns from investment in education for persons with different levels of educational and numbers of children;
• ratio of lifelong incomes to material returns from investment in education for men (or women) with different levels of education.
• ratio of lifelong incomes to material returns from investment in education for men and women where the cost of education differed; etc.

The results of our calculations revealed a significant difference in the returns from investment in education for men and for women, and made it possible to identify, separately for men and for women, the economic and socio-demographic conditions under which getting a higher education becomes either profitable or economically pointless.

Calculation of lifelong incomes: some results

Our calculations showed that in the future and under more favorable economic conditions, (when the dependence of wage and pension size on gender, educational level, and age approaches the correlation more typical of the advanced economies) men will still derive larger material returns from education than women.

The lifelong incomes of men with a higher education will be 49 to 64% higher (depending on the career) than those of men with a secondary education. In the case of women, the excess over lesser educated women will be only 41 to 54%, and only for those women who will have no breaks in their careers.

The gap between the wages of men and women largely determines the difference in their lifelong incomes. We were conservative in our calculations and assumed that the women's wage level is only 30% lower than that of men. But even with this assumption, the women's future lifelong incomes would constitute only 73-80% of men's (depending on the educational level and the length of career breaks).

Generally speaking, as a result of the breaks in paid employment caused by the need to care for a child for three years, women fail to receive 6-10% of the summary income. Looking after two children for six years deprives them of 12-20%, and after three children, of 18-28% of the possible summary income.

If we compare the lifelong incomes of men and women with the same educational level and same career type taking into account the presence of a child (children) and the use, by the woman, of maternity leave (leaves), the following picture would emerge: if there is one child, the summary income of the woman would be 25-30% lower than that of the man if both have a secondary education, and 30-34% lower if they have a higher education; if there are two children, the difference would be 30-35% and 35-40%, and if there are three, it would reach 34-41% and 40-47% respectively. The higher the education the more costly the career breaks will be in comparison to men.

For young men, active service means that they do not receive 4-7% of their lifelong income. In relative terms, the losses will be the lowest in the case of highly educated men with successful careers.

Calculation of material gain on investment

To estimate the economic effectiveness of private investments in higher education, we compared the lifelong incomes of persons with only a secondary education to those with higher education. We assumed that the secondary education was budget-funded and was free for the individual, and that the higher education was on a for-fee basis. We considered several variants of the costs of preparing for the entrance examinations and of costs (fees etc) at an institution of higher education. On this basis, we built scenarios which reflect precisely enough, the terms of for-fee education at higher educational establishments of different types. The results of calculations are presented in this section; for the sake of clarity, the educational costs are arranged in the ascending order.

Thus, despite moderate educational fees ($400 for a preparatory course and $500 annual tuition for five years) and the wages currently drawn by men and women, all the persons who had paid for a higher education recouped their investments regardless of the type of career and of whether their working lives had socially use-ful breaks.

However the women who had received a higher education but followed the "pessimistic" career would be able to get a larger life-long income than women with a secondary education only if they had no children (or took no maternity leaves). The difference in their total incomes would be only 4%.

The women who managed to make an "expected" or a successful ("optimistic") career do not have such problems. All of them, regardless of the number of children, would ordinarily enjoy a higher lifelong income than women with only secondary education and the same number of children, although the increase in family size evens out the differences in the lifelong incomes of women with different educational standards. Thus, while for women who have had an "expected" career this difference reaches 25% in favor of women with a higher education; if there are three children, this figure goes down to 15%. For the women who have had an "optimistic" career, these figures would be 35 and 29% respectively.

Calculations made to compare men's and women's lifetime incomes show that under the "pessimistic" career version, the life-time incomes of men (who had no career breaks) would be 1.5-2.4 times higher than those of women (depending on the presence and number of children). In the case of a successful, "optimistic" career, the gap would be significantly narrower, only 1.4-1.8 times.

If the fees are higher, reaching $1000 for a preparatory course and $3000 annually for the five years of training, both men and women must have at least an "expected" career, and women cannot afford more than one maternity leave, just to recoup the spending on education. But even under the "optimistic" version, both men and women would, in the end, receive a lesser material return than the men and women who had only a secondary-level education. And even with an "optimistic" career, women with a higher education would receive 1.8-3.8 times less (depending on the presence and number of children) than the men who had no break in employment.

We also drafted another calculation scenario making sure that its parameters were as close as possible to the current real condition of would-be teachers who decided to pay for their education at Moscow Pedagogical University. The preparatory course and tutoring cost $400, and the fee is $1500 annually for five years.

The fee figuring in this scenario makes it possible for all men and women regardless of career pattern (optimistic, expected or pessimistic) or the presence of employment breaks (the limits set by the model) to derive an income throughout their lives. It is another matter that most of them would not be able to recoup their investments in higher education. This is especially true of women.

Among those getting a higher education on these terms, only men with an ''expected"or "optimistic" career path had an advantage over employees with secondary education (the lifelong income of the former would be 6-9%, and of the latter, 24-26% higher than that of the men with the same career type but with a secondary education).

Women would not get even this much. The maximum advantage they may hope to gain over women with a secondary education would be only 2-5%, provided they have made an "optimistic" career (which is not very probable) and used only one maternity leave. For the rest of the women who receive a higher education on these terms, material gains would be lower than those they would have received not having a higher education.

Comparing the material gain of the men and women who received a higher education on a for-fee basis, it turns out that at best, the women would be able to get 67% of what the men would gain provided they have a very successful career and no employment breaks. If a woman has used one maternity leave, her summary material gain would constitute 33-60% of a man's (depending on the career version); with two leaves, this share would go down to 19-54%, and with three, to 7-48%.

The results of our calculations have shown a significant difference in return from personal investment in a higher education for men and for women, and made it possible to identify the economic and socio-demographic conditions under which [paying for] a higher education becomes economically pointless for men and for women.

These examples show that given Russia's present system of labor remuneration (especially women's remuneration), the present economic situation and gender asymmetry in the sphere of employment, the fact of gender neutrality for for-fee higher education fails to guarantee equal effectiveness for men's and women's investments in education.