Does Gender Equity Influence Economic Well-Being?

On September 15, 1995, the United Nations’ Fourth World Conference on Women adopted the Beijing Declaration, a progressive resolution that outlined comprehensive actions governments should take to improve the status of women. The document affirmed participating governments’ commitment to “the equal rights and inherent human dignity of women and men,” and argued that the “full participation on the basis of equality in all spheres of society” was necessary for the “achievement of equality, development, and peace.” In the decades since, this prediction has proven prescient, particularly with respect to economic development.  Societies with a high degree of gender equality tend to experience higher GDP growth, higher national competitiveness, and higher human development indexes. These trends suggest that aside from the obvious human rights rationale for equality, there may be economic reasons to expand women’s rights. But how robust are these relationships, and how confident can we be about ‘what causes what’?

In this case study, you will use datasets from the Data Analysis tool to evaluate whether there is a relationship between gender equity (particularly with respect to education, economic freedom, and voting rights) and economic development. You’ll be asked to interrogate the nature of this relationship to determine whether 1.) development causes gender equality, or 2.) gender equality causes development. Finally, you will speculate on the political implications of this relationship, specifically whether potential economic benefits are enticing enough to compel ambivalent nations to expand women’s rights. The social status of women is dynamic, constantly evolving as a result of new social and political developments, so concrete evidence that gender equity promotes economic development might help encourage nations to extend rights to women and catalyze campaigns for women’s rights worldwide.

The last century has seen an expansion of women’s social and political rights that, while incomplete, has given girls and women unprecedented opportunities to improve their lives and communities. For most of human history, traditionalist cultural attitudes have confined women to domestic roles. These attitudes have been reinforced by institutions, laws, and customs that promote certain types of behavior.^[1] Women were barred from education, politics, and other public spheres, and had few opportunities for self-improvement outside of the home. They were also disproportionately the victims of sexual violence, and on average were more likely to die more than men and boys in developing countries.^[2]

While these problems persist in much of the world, strides have been made recently to correct a history of discrimination and level the playing field between men and women. Women have been granted the right to vote in virtually every democracy, and in many countries with voluntary elections they turn out to vote at higher rates than men.^[3] Additionally, more girls are receiving an education than ever before, with particularly pronounced gains in Sub-Saharan Africa. As recently as 2000, only 44% of girls in Sub-Saharan Africa completed primary school; as of 2020, that figure was 66%, higher than the rate for men in the region.^[4] Access to reproductive healthcare has also greatly expanded since 2000, resulting in a marked decrease in maternal death rates from 342 deaths per 100,000 births in 2000 to 211 deaths per 100,000 births in 2017.^[5] These gains represent clear progress in the political, educational, and healthcare status of women.

Despite these gains, there are still substantial barriers to women’s equality that need to be addressed. The IMF notes that “across all developing countries, more women and girls still die at younger ages relative to men and boys, compared with rich countries” because of sex-selective abortions, early childhood issues, and problems during child-rearing years.^[6] This creates 3.9 million “missing” women each year in developing countries. Women also face discrimination in schools and the workplace. Only 49.6% of working-age women participate in the workforce, and many of those jobs are in low-paying jobs or subcontracted work that are very insecure.^[7] On average, women globally only earn 77 cents per dollar for performing comparable jobs. That figure is even lower for women with children, with mothers in Sub-Saharan Africa and South Asia making 31% and 35% less than their male counterparts respectively.^[8] There is a concerning lack of progress since 2015 that has only been exacerbated by the COVID-19 pandemic, so nations must work to expand upon past steps toward gender equality.^[9]

Having established the triumphs and challenges of gender equality in the 21st century, we can now consider the relationship between gender equality and economic development. According to Korea University professor Jinyoung Kim and colleagues, limited education investment and barriers to job market entry lead to an “underutilization and misallocation of women’s skills and talents” that, if removed, would increase aggregate income by 6.6% and per capita GDP by 30.6% over one generation.^[10] Using education as an example, if we accept the premise that men and women have similar distributions of innate abilities and aptitudes, then a school system (with a finite capacity) that disproportionately educates men would allow less talented boys to receive an education at the expense of more talented women.^[11] On balance, this means that the average skill level of those who get educated is lower than it would have been if men and women had the same access to education. Because of this, educational resources are spent on less capable students, which ultimately results in a less skilled and less productive labor force that inhibits economic growth.^[12]

Many economists and international organizations support Kim and colleagues’ argument about the relationship between gender equality and economic development. In her remarks to the Korea Gender Equality Forum, IMF First Deputy Managing Director Gita Gopinath notes that while women’s labor force participation in South Korea “increased from 53 to 60 percent between 2001 and 2021, there is still a gender labor participation gap of 18 percentage points” that, if corrected, would cause South Korea’s real GDP to grow by more than 7% by 2035.^[13] Similarly, PwC estimates that if all countries in the OECD increased their female employment rate to match Sweden’s, it would increase GDP by $5.8 trillion.^[14] The OECD itself conducted research on the economic impact of discriminatory gender-based social institutions, particularly educational barriers to equality, and found that if these institutions were eradicated then global GDP per capita would be $9,142 by 2030, compared to $8,378 without any action.^[15] Taken together, research on the topic suggests that there is a clear relationship between gender equality and economic growth.

While there seems to be a correlation between economic development and gender equality, the causal direction of this relationship has been contested by some scholars. While many argue that the increased utilization of women’s skills and more efficient resource allocation caused by the expansion of women’s rights directly leads to higher economic development, there are other scholars who believe that lower poverty itself causes increased women’s rights. For example, Eliana Rose finds that houses with excess assets to sell experience comparable rates of child mortality across genders during droughts.^[16] This suggests that having a financial cushion can help improve health outcomes for young girls. Additionally, many of the gendered choices about whether a family can send a girl to school or provide her healthcare are influenced by the financial realities of poor families in developing countries. When families are not at the margins of subsistence, they can devote more resources to their female children’s intellectual and physical health.^[17] You will discuss your opinions on the nature of this relationship in the questions below.

^[1] Branisa, Boris, Stephan Klasen, Maria Ziegler, Denis Drechsler, and Johannes Jütting. “The institutional basis of gender inequality: The Social Institutions and Gender Index (SIGI).” Feminist economics 20, no. 2 (2014): 30.

^[2] Revenga, Ana, and Sudhir Shetty. “Empowering Women Is Smart Economics.” Finance and Development | F&D, March 2012. https://www.imf.org/external/pubs/ft/fandd/2012/03/revenga.htm.

^[3] Schaeffer, Katherine. “Key Facts about Women’s Suffrage around the World, a Century after U.S. Ratified 19th Amendment.” Pew Research Center. Pew Research Center, April 28, 2021. https://www.pewresearch.org/short-reads/2020/10/05/key-facts-about-womens-suffrage-around-the-world-a-century-after-u-s-ratified-19th-amendment/.

^[4] “Education: Girls Are Catching up with Boys in Sub-Saharan Africa.” World Economic Forum. Accessed May 2, 2023. https://www.weforum.org/agenda/2022/07/education-africa-girls-boys-gender-school.

^[5] “The World Bank In Gender.” World Bank. Accessed May 2, 2023. https://www.worldbank.org/en/topic/gender/overview.

^[6] Revenga, Ana, and Sudhir Shetty. “Empowering Women Is Smart Economics.” Finance and Development | F&D, March 2012. https://www.imf.org/external/pubs/ft/fandd/2012/03/revenga.htm.

^[7] “Women in the Changing World of Work – Facts You Should Know.” Labour Force. UN Women. Accessed May 2, 2023. https://interactive.unwomen.org/multimedia/infographic/changingworldofwork/en/index.html.

^[8] Ibid.

^[9] Henderson, Rebecca. “After Two Years of Slowing Progress, the Global Community Must Prioritize Gender Equality.” Forbes, September 21, 2022. https://www.forbes.com/sites/rebeccahenderson/2022/09/20/after-two-years-of-slowing-progress-the-global-community-must-prioritize-gender-equality/?sh=4c4b31096721.

^[10] Kim, Jinnyoung, Jong-Wha Lee, and Kwanho Shin. A Model of Gender Inequality and Economic Growth, February 2016. https://www.adb.org/sites/default/files/publication/180687/ewp-475.pdf.

^[11] Chen, Derek HC. “Gender equality and economic development.” World Bank policy research working paper 3285 (2004).

^[12] Klasen, Stephan. “Does gender inequality reduce growth and development? Evidence from cross-country regressions.” (2000).

^[13] Gopinath, Gita. “Gender Equality Boosts Economic Growth and Stability.” International Monetary Fund, September 27, 2022. https://www.imf.org/en/News/Articles/2022/09/27/sp092722-ggopinath-kgef-gender-korea.

^[14] PricewaterhouseCoopers. “Increasing the Female Employment Rate across the OECD to Match That of Sweden Could Boost GDP by US$6 Trillion.” PwC. Accessed May 2, 2023. https://www.pwc.com/gx/en/news-room/press-releases/2020/women-in-work-index-2020.html.

^[15] “The Economic Cost of Gender-Based Discrimination in Social … – OECD.” Accessed May 2, 2023. https://www.oecd.org/dev/development-gender/SIGI_cost_final.pdf.

^[16] Rose, E. (1999), “Consumption Smoothing and Excess Female Mortality in Rural India,” Review of Economics and Statistics 81(1): 41-49.

^[17] Duflo, Esther. “Women empowerment and economic development.” Journal of Economic literature 50, no. 4 (2012): 1058.