Last month, the International Monetary Fund (IMF) produced a podcast where IMF Managing Director Kristalina Georgieva and US Treasury Secretary Janet Yellen, the first woman ever to lead the US Treasury Department, celebrated International Women’s day with a conversation about the advancement of women in the field of economics. Here is the transcript of the conversation:
Kristalina Georgieva: She has done what no man has achieved in the United States, a hat trick, being the chair of the Council of Economic Advisers, chair of the Federal Reserve, and now the Secretary of the Treasury. No wonder that everybody is looking forward to hear from you, secretary Yellen. And let me just say that we have chosen this theme, “the age of Womenonics” consciously. Never in my life, I have seen so many women in key positions where core economics and finance matter. You, as the Secretary of the Treasury, Chrystia Freeland in Canada, Christine Lagarde, my predecessor at the ECB, Ngozi Okonjo-Iweala at the World Trade Organization. The very first woman president of a multilateral development bank Odile Renaud-Basso at EBRD. We have two women across 19th street as chief economists of the World Bank and of the IMF. We are very proud with our own Gita Gopinath, and we are very proud of Carmen Reinhart on the other side of the street. At the Fund, we have a Deputy Managing Director, fantastic dynamic woman, Antoinette Sayeh, and we have grown our women in management by 20 per cent over the last five years. Janet, I admit we still have some way to go to reach parity, but parity, we will rich. So welcome.
Janet Yellen: Kristalina first, let me say what a pleasure it is to be with you on International Women’s Day and to have a chance to talk about the progress that you described that women have made in our profession. But unfortunately we still have a ways to go. There is still too few women around the tables that you and I sit at, but it is wonderful to see the improvement.
Kristalina Georgieva: Thank you, Janet. And if I may, I want to go into the first question and it is how you made your choice to study economics. I know that you did this in Brown, after first intending to major in philosophy, and then you went to Yale and there you concentrated your PhD on employment and capital formation. You’re very well known as a very strong labour economist. How did you make these choices and how, having been concentrated on people on the impact of economic policy on people, is helping you in your job today?
Janet Yellen: So I always understood, I do care about people and wanted to do something with my life that would have a positive impact on people. And I discovered as a freshman in college, that economics was a field that matters to human welfare. I think by way of background, I tell you that my parents came of age and married during the Great Depression. And I grew up hearing stories from them about the hardships that the Great Depression imposed on people. And my father was a family doctor, and most of his patients were blue collar workers, working class people who were affected by the ups and downs in the economy. And his office was actually in our home. And I got to know many of his patients, he would talk about their lives to me and my mother and my brother. And he talked about the tolls that unemployment took on his patients, the financial toll, the psychological toll, the toll on family life.
Janet Yellen: So I think as a child growing up, unemployment and the job market, I understood were really critical aspects of economic welfare. And then I went to Brown. I took my first courses in economics and I discovered that economics, and particularly at that time, Keynesian economics, had an explanation for what it was that happened in economies or even globally, that could lead to periods of very high unemployment, which took a huge toll on human welfare and what could be done about it. And it was exciting to me, monetary and fiscal policy were tools we could use to address high on employment. The world didn’t have to suffer indefinitely through periods like the Great Depression. And I realised early on, that was what I wanted to do for my life. And really that is what I’ve done for my life as an academic. I studied on employment and business cycles. And then I had the incredibly rare experience, privilege, to have served as chair of the Council of Economic Advisors in various positions, including chair at the Federal Reserve, and now as Treasury Secretary. And throughout my focus has always been on trying to keep the economy operating as close to full employment as we possibly can, and the benefits that that brings. But I went directly … Many young people now who study economics in college, they take internships, do a research assistantship, I went directly to graduate school where I had the privilege to study with James Tobin, who later won the Nobel Prize. I went there to study with him and he was one of the great American Keynesian economists. And I think what really inspired me about him was that he had a sense of passion for social justice. And economics as you know, it can be very mathematical, and sometimes in all the math, people lose sight of the fact that at the end of the day, this is about human welfare. It’s about making people’s lives better and Tobin never lost sight of that. And he understood, I mean, he too had lived through the Great Depression and he understood how important the performance of the economy as a whole is for human welfare. And he was really a mentor to me and inspired me to study economics. I hope you’ll tell me a little bit about how you became interested.
Kristalina Georgieva: In my case, I studied on the other side of the Iron Curtain and in the early 80s, I had to decide what would be my PhD field. And at that time, two things happened that influenced me to go into environmental economics. The first one was that there was a member of my family who got very sick because of groundwater pollution. Completely preventable if we were to have good regulations and if we were to have access to information. And it cried for me that we have to have policies that are protecting people’s health and that are allowing the economy to grow without these negative impacts. And the second reason was so that I got at that time, the need to define the value of my thesis by quoting a communist party Congress document, which I didn’t think was very research oriented. So I said to myself, what is it that the communist party said nothing about? And it happened to be environment. But on a more serious note Janet, what you said about your family coming through the Depression, seeing people really so keen just to have a job, reminds me of my country, Bulgaria, during the 90s, when our economy collapsed. Hyperinflation ate my mother’s life savings over a couple of days. And I had to get up at four o’clock in the morning and queue to buy milk for my daughter, which is so clearly a lesson as to bad policies are being paid by ordinary people’s suffering. And good policies can bring opportunities to everyone. So my message to my staff at the Fund is policies are for people, for improving people’s lives, and your point that we need to make it so clear that economics is not a dry science, it is actually an empathetic science, one that is about the livelihoods of people and the ability for society to do better.
Janet Yellen: I completely agree with you. It vitally affects human welfare and really studies trends and developments that have an enormous impact on the quality of people’s lives, what they feel they can achieve and the opportunities that they have. And of course your background in environmental economics is tremendously important now, as we deal with the challenges posed by climate change which something that is a critical global challenge that we’re all focused on now.
Kristalina Georgieva: And we take it to be at the heart of the work of the IMF now and in the future, because we have to bring economic policy to help us both manage the risks of climate change, but also capture the opportunities of green jobs and green growth. One of the additions that we want to bring to the audience today is we know that diversity of thought is very valuable and yet it is a persistent problem. We don’t have enough women in economics. And in fact, in the last two decades, the share of women in PhD in economics has stagnated. It’s around 30 per cent. Yes, it is better than during your times. In ’71, you apparently were the only woman of about two dozen PhD in Yale in economics, but it’s stagnating. So what can we do about it? How can we open up a more interest and bring more young girls to be seeing themselves to be the Janet Yellen of the future?
Janet Yellen: So that’s a great question. Let me offer some thoughts and I’d be interested in what your thinking is on this as well. So, first of all, I think when women are introduced to economics, and often they don’t take an economics course either in high school or in college, but when they do, often the way economics is taught is a turnoff to them. And what you and I just talked about, how important economics is to human welfare. They don’t see that in an introductory economics class and they often, or in disproportionate numbers go off to other fields. They’re more attracted to sociology, which they think really does concern how people live and interact and what determines human welfare. And there are a lot of people now who are thinking about how can we teach economics in a way that shows women, that this is a great field and it’s a way to improve human welfare. And there are people like Claudia Goldin who’s at Harvard who has a grant to do experiments around the country in undergraduate economics classes, to see, and to study these experiments, to see what works. People are rethinking textbooks and ways in which textbooks are biased toward things that interest men rather than women and are rewriting those books. So that’s one thing. A second thing I would say is that there’s been an absence of mentors and role models. There’s implicit bias against women. I read a paper recently, it was essentially an experiment. Someone had sent out emails to faculty members in an economics department. Some were clearly written by men and some by women and the emails to the faculty requested just 10 minutes of time to talk about something. And the emails were identical, but it turns out that requests by women were ignored way more than requests by men. That’s not the only thing that chose a kind of implicit bias against women. There was a New York Times article recently about the way in which women are treated in seminars versus men. And my guess is that you and I have had the same experience, which is that economic seminars can be pretty aggressive. And it’s not unusual when a person is giving a seminar for interruptions to start very early. But a really rigorous study that was reported recently in The Times showed that there’s much more aggressiveness toward women, that typically a woman can start giving a presentation and before she’s even through her initial slide, this is my topic, and this is what I’m going to do in the seminar, somebody’s said, you’ve asked the wrong question and that data isn’t relevant anyhow to the question. I think experiments and experience, I think suggest that women enjoy collaborative environments more than aggressive environments. And the more women there are in a workplace or in an economics department, the more collaborative and supportive, it tends to be toward women. And just having more women actually changes the culture. I was President of the American Economic Association last year, and we did a study. We surveyed women in the field to try to understand the culture and why there were so few women and the results were really startling. They showed a huge amount of discrimination against women, that people felt harassed, they felt the environment was often aggressive, they changed their behaviour in ways that enabled them to survive it, but were probably not good for their careers. And so one of the things that we did in response to this, we realised there’s a culture problem in the profession, and we need to change the culture. And we set up a task force on best practices and tried to give concrete suggestions to how leaders like ourselves in institutions like ours, who are in academic departments, what are some things they could do that would make the environment more positive to promote diversity and inclusion. And there were a lot of things that we’re able to bring to the table. I’m sure you’ve thought about this too, Kristalina and I’m really interested in what your thinking is.
Kristalina Georgieva: There are two lessons I learned in my professional life. The first one is the danger of women trying to blend in in a male dominated environment. This just flashed in my mind, walking into the World Bank building in Washington for the first time. I was to give a seminar and I had a colourful jacket with flowers on it. I walked in the building, looked around, walked out, went and bought a dark blue suit so I can blend in. But it is dangerous because what we want is diversity, we want women to bring ideas and perspectives that otherwise will not be in the conversation to emphasise topics that otherwise may be underrepresented in research. And so I told myself since then we need to create an environment in which everybody, men and women, feel equally comfortable and they can step up. So what does that mean? And this is the second thing I learned. There simply have to be more women in senior positions. And these women in senior positions ought to mentor other women, to make sure that they create that sense of confidence for younger women to step up. I crafted the phrase that I repeat very often to women. I do bring our senior women together at the Fund. And what I tell them is don’t be shy, please apply. Because as you know, women may be more self-critical and forego opportunities to engage on issues on which they are the best, or they have a lot to contribute including in management. So I think that you and I, people like me, we have a tremendous responsibility to bring up women and also to be as honest and direct as we can be. In fact, I’m going to ask you a question. What would be your advice to women that may hit a wall, how to handle it, how to handle disappointment?
Janet Yellen: I think we’ve all had that experience of hitting a wall and feeling disappointed, either over a small setback in the job or a larger failure, but what I’ve done in my own life, I think is simply to move on. And I have the advantage as I’m sure you do, I love what I do, I love the field, I really find it interesting. There are a lot of different things I can do, a lot of different paths to take. And if one thing doesn’t work out, I look for something else that is a path forward. I was an assistant professor at Harvard. Now, not very many people got tenure, but I was certainly one of the people who did not get tenure. And was that a setback? I’m not sure. I didn’t really expect to get tenure, but at that point I decided I would do something different. And I came to the Federal Reserve. I joined the staff as research economist, and I discovered how much I enjoyed doing public policy and how much I enjoyed monetary policy and international economics and applied issues. And it was a different path, but it ultimately really took me into a large part of my career that was started by my experience at the Fed. I wanted to come back. I understood what the Federal Reserve was doing and how I could contribute what it was like.
Kristalina Georgieva: It is wonderful. It actually sums up my philosophy, which is one door closes, another one opens up. I remember coming back to Bulgaria from Australia, where I was applying to be a professor in the Canberra University, in Australia National University. So I’m coming back. I didn’t get the job. And the next thing that happened was I got to go to MIT and I had a wonderful one year there then joined the World Bank and the rest is history. So we have to recognise that not everything we strive for will happen, but believe in yourself and persevere and look for things that give you a sense of contribution to make your community, your country, the world, a better place. Talking about the world getting to be a better place Janet. One thing that I know you’re very concerned and I’m very concerned about is the disproportionate impact of this crisis on women, on young people, on those with low skills. Some are now talking about she-cession, a recession that impacts women. There is probably also a youth-cession to look into. How do you see us stepping up in your work, me, myself at the work of the Fund to make sure that we do not lose progress made on gender equality. And we push forward for dealing with inequalities of any kind as a positive outcome that can come from this crisis.
Janet Yellen: I think it’s absolutely tragic, the impact that this crisis has had on women, especially low skilled women and minorities. In the United States, we’ve been talking about this as a K shaped crisis. People at the top of the income distribution, have continued to do very well. And people closer to the bottom, who have been really struggling for a long time in the United States and many other countries, have been the hardest hit. It is an extremely unfair thing that’s happened. I mean, women, first because they tend to be disproportionately represented in the service sector that’s been hardest hit, have seen tremendous job loss. And then because women still disproportionately have the responsibility for caring for children, with children out of school, and responsibilities for taking care of sick relatives or family, they’ve dropped out of the labour force disproportionately as well. So we’ve had a huge decline in the labour force. People just can’t work. They have to take care of children who can’t be in school. And they’ve really lost a lot of income and opportunities. We’re really concerned about scarring, permanent scarring from this crisis. And it’s focused us very heavily on doing everything we can to get back on track as quickly as we can. So President Biden, I’m delighted to be part of this, we’re hoping that this week, a large pandemic package is going to be passed in Congress that will really by, I hope by next year, I think there’s a prospect that with an all out effort on vaccination and reopening schools, that we can really get the labour market back on track later this year or next year to avoid what we had after the financial crisis, which was almost a decade before the economy ever got back to full employment. We don’t want to see that happen this time, but there are a long standing challenges that women face. They’re disproportionately represented in the care economy where job opportunities are not that good. Often jobs, lack benefits, have low wages and we’re going to address that as well, going forward. I think we need to really improve conditions that women face, bring them into the labour market. One of the things we’ve seen in the United States is that labour force participation for prime age women plateaued at a lower level than we see in Europe. And it’s actually drifting down over time. Many people don’t have paid leave for family emergencies and we lack adequate childcare support for people who work. And so these are things we’re going to address over time.
Kristalina Georgieva: We are very supportive as you know of the policies you are pursuing to address the needs of the most vulnerable people, to provide relief to the poor, to those that are most severely impacted by the unemployment this crisis has triggered. And also creating some of the policies that long-term, help more women to be in the labour force, like more funding for childcare. I hope we would see these very progressive policies to be taking hold. Not only because we are responding to this crisis, but because we want the world economy to be dynamic on the basis of bringing in the talent of all people, men and women. So we wish you in that regard, as the Treasury Secretary, all the success, and I know that you also have your eyes set on making sure that the United States leads the world in the transition to the new climate economy, where I hope there would be a lot of space for women.
Janet Yellen: Well there are so many challenges that we face as a global community, climate change, diversity and inclusion, economic growth. So many challenges that we face and young people have many, many different paths by which they can involve themselves and contribute. My view of a good life is, if I’m advising young people, it’s first of all, to try to figure out what really excites you? What are you interested in? Most of us who work you want to get up every day and really look forward to how you’re going to spend the day, the problems that you’re going to work on. And so figuring out, I mean, for me, it was easy. I fell in love with economics as a freshman in college, but figuring out what is it you really enjoy doing and want to get up every day and do. And I hope for many people that will be economics. I think economics is a terrific field, but there are obviously a lot of other paths. And then the second thing I’d say is most of us don’t work independently. We work in organisations and I think once identity is very much tied to one’s job and how you feel about it and being part of an organisation whose mission you really identify with, that you can feel proud to say, I work for the IMF. I work for the US Treasury. And that means something. You have a mission, we have a mission, then explain what it is and identify with it and feel it’s something that makes the world a better place. And that you believe in the way the organisation is run, that it has the right values, that it treats people well, that it supports people. And you have an environment where you’re going to work every day with people you respect and collaborate with. To me, those are sort of the elements of a good life. And that’s kind of what I would recommend to young people.
Kristalina Georgieva: Well, this is really a wonderful message. Be a force for good. I could not finish this conversation in a better way Janet. I hope that everybody who has listened to you would be inspired to reach for their full potential. I am very proud to belong to the same profession you belong to.
The piece is slightly abridged version of the transcript of the IMF Podcasts. www.imf.org/en/News/Podcasts