Although sometimes used as synonyms, economic growth and economic development refer to different processes. While economic growth refers to an increase in real national income and output (i.e., GDP growth rate), economic development refers to an improvement in the quality of life and living standards (i.e., life expectancy). It is often expected that economic growth leads to economic development because it allows a country to spend more on education and health care. However, this relationship is not always reflected in real life. Economic growth and development have a profound impact on individual lives, and thus, economists throughout history have sought to understand which factors and actions can lead to economic growth and development such as investment in technology and education.
Yet, the role women play in the economy has long been overlooked. Although women represent half of the population, the impact they can generate on both economic growth and development has been underexposed until recent years. Research has shown that gender inequality has an adverse effect on economic growth and development and thus, countries should search and foster ways to create an equal society if they want to have economic growth and development. The following dossier will explain how and why gender equality is good for the economy by focusing on four main areas: equal access to health, equal access to education, equal economic participation and earning potential, and political decision-making power.
Why is gender equality good?
This Ted Talk is a very good introduction to the present challenges and limitations women face today that subsequently affect the economy and ways upon which it is possible to improve these conditions and thus create economic growth and development. In this Ted Talk Sheryl WuDunn, author of the book “Half of the Sky,” talks about some of these limitations such as equal access to healthcare, food, and education. She also mentions how empowering and educating women can help fight poverty and produce economic growth by reducing fertility rates, improving spending in low-income homes and creating a bigger and more productive labor force. Finally, she talks about some of the challenges to achieve gender equality and reducing poverty, including sexual trafficking, maternal mortality, among others.
This report by the World Economic Forum provides empirical evidence to many of the claims made by Sheryl WuDunn and is an ideal source to start researching the impact of gender inequality on economic growth and development. It shows the causal link between gender equality and women’s empowerment with economic growth. For instance, it explains how women’s empowerment can benefit a country because it will have a more efficient use of the nation’s human capital endowment. It also describes how reducing gender inequality enhances productivity and thus produces economic growth. Finally, it provides a summary of the main areas upon which data has shown that gender equality can positively affect economic growth, which includes equal access to health, equal access to education, equal economic participation and earning potential, and political decision-making power.
The article can be dowloaded here:
Case Study: Rwanda
This short video by the International Monetary Fund (IMF) shows why gender equality is essential for economic growth and development through a real-life case study example. The video presents the current situation in Rwanda in matters of gender equality. It shows how Rwanda's push towards gender equality in education, workforce inclusion, and political representation post-war has helped the country's economic growth. The video talks about different areas where the presence of women has improved the economy, which includes women in leadership and labor force, and how it is trying to set an example for other countries around the world. The video shows the positive consequences of making an economy and government more inclusive.
Equal Access to Healthcare
In this podcast by Ellen Starbird, director of USAID’s Office of Population and Reproductive Health, she explains what is the ‘demographic dividend’ and why it is important for economic growth. Throughout the podcast, she explains how improving reproductive health can boost productivity by reducing levels of fertility which changes the proportion of working age people compared to dependents and creates a fast-growing economic period that is often referred to as the ‘demographic dividend’. She also explains how getting to this stage requires a comprehensive effort, which includes strengthening access to family planning commodities and knowledge about reproductive health care. In particular, she highlights the role of female access to healthcare to create this phenomenon as well as the need to create a supportive environment through investments in education, labor markets, and a social safety net.
You can listen to the podcast here:
Case Study: Guatemala
This video called “Con Los Manos Vacias / Empty Shelves, Empty Hands” shows the struggles women face to access reproductive health services in Guatemala. The video documents several of the challenges women go through to access reproductive health supplies, which include socio-cultural and religious misconceptions as well as lack of supplies and reliable information on family-planning methods. The video also expands on the negative consequences women face by not being able to obtain good reproductive health services, such as unplanned pregnancies. More importantly, it links back to the previous podcast by showing the need for a comprehensive approach to reproductive health that not only includes better and easier access to healthcare services but also more education and the presence of a social safety net.
Equal Access to education
In this paper, the authors analyze the impact of “female basic education” on women’s fertility, child mortality and women’s empowerment for a sample of 54 countries. “Female basic education” is defined as completing six years of schooling and acquiring literacy, which differs from the majority of other studies using years of schooling as a proxy for education. By differentiating schooling from learning, the authors are able to identify the real impact of female education. Through this approach, they determine that the effect of female basic education on female fertility, child mortality and women’s empowerment outcomes is 3 to 4 times larger than the estimates done by using only years of schooling as a proxy. This finding suggests that female basic education can lead to a 50 percent of the reduction in fertility, 36 percent of child survival improvement, and 80 percent of the increase in female empowerment. These results show that female education has an impact much higher than previously believed.
The paper can be dowloaded here:
Case study: South Sudan
In South Sudan, primary education has been one of the most significant challenges for the economic development of the country. The video follows a project led by UNOPS to create more inclusive schools that take into account many of the barriers girls traditionally have had to face to attend school. These barriers included a lack of appropriate facilities like separate sanitation arrangements. For this reason, the 14 new schools were built with gender-sensitive physical infrastructures such as dedicated playgrounds, sanitation facilities, and a food storage room, especially for girls. The program also looked beyond infrastructure and took into account socio-cultural barriers such as the expectation of early marriage, and the responsibility to carry out household chores like collecting water or cooking. Because of this, the project also engaged with the local community to make them aware of the importance of educating girls.
Equal economic participation and earning potential
In this podcast by the IMF, Sarah Iqbal talks about research done by the organization on women’s participation in the labor force across the world. Iqbal discusses many of the barriers that women face in starting businesses and entering the workforce. For instance, women are not able to get loans because often they do not have properties or assets to put as collateral. Many of these barriers are based on laws and cultural practices, and Iqbal discusses how it is possible to change or modify them to create a more inclusive system for women. Finally, Iqbal talks about how incorporating women into the labor force can increase the GDP growth rate in a country
You can listen to the podcast here:
This Podcast of Freakonomics explores many of the popular misconceptions people might have about the Gender Pay Gap and provides data that has been collected on the subject to better explain the phenomenon. Through the interview of Claudia Goldin, several of the factors that influence the Gender Pay Gap are examined such as sexism, willingness to bargain on salary or flexibility, level of education, maternity leave, differences of occupations, etc. In the podcast, several popular myths are debunked through empirical data, and the real roots of the problem are addressed as well as the implications for the economy and businesses as a whole.
You can listen to the podcast here:
Case study: Mongolia
Although women in Mongolia are better educated on average than their male peers, the gender gap in labor force participation rates has more than doubled in the last twenty years, exceeding 12.6 percent today. This video by the World Bank expands on the current gender labor force disparity in Mongolia and discusses the underlying constraints women face in the country including social norms and attitudes against women, the absence of maternity leave and lack of childcare services. The video also provides some recommendations on how the state could create a more inclusive economic environment including social campaigns to change gender norms and better legal and regulatory systems.
Political Decision-Making Power
In this paper, the authors analyze the evidence on how the share of women politicians influences economic performance. The authors use a regression in discontinuity design to explore the causal effect of legislator gender through comprehensive data on competitive elections to India’s state legislative assemblies, exploiting close elections between men and women. From their research, they are able to identify that constituencies that elected women had higher growth in economic activity. During the sample period, the average growth of the constituencies was about 7 percent meanwhile in constituencies with female legislators was about 25 percent. This higher economic growth can be explained by evidence that shows that women legislators tend to be less criminal and corrupt, less vulnerable to political opportunism (in terms of being less responsive to electoral incentives) and more efficient. The authors cite laboratory evidence that suggests that there are inherent differences in preferences between women and men (fairness, altruism, higher risk aversion, lower overconfidence) that are predictive of corrupt or criminal behavior. Finally, evidence also seems to point that women politicians are more effective at delivering health and primary education, which increases human capital and thus could potentially have larger long-term growth.
The paper can be dowloaded here:
Case study: India
In this video, Esther Duflo, a world-renowned economist at MIT, explains how in India a recent law-change showed the positive effects of having women in leadership positions. Duff describes how panchayats - village councils in India - were forced to give political power to women through law reform. From this, Duflo was able to examine the impact of the newly acquired female decision-making power and was able to determine that it influenced both the policies that the councils implemented and local attitudes towards women's rights.
You can also find the paper where she expands on these findings here:
Women Empowerment & the Economy
Although women empowerment has been shown to have a positive impact on economic growth and development, this paper suggests that it is not as clear-cut. The authors use data from Mexican PROGRESA program to see if cash-transfers to mothers (as opposed to fathers) increases expenditures on children and subsequently increases economic development. Their results show that indeed women spend more on children and invest more in human capital but that does not necessarily translate into economic development because it also leads to a decline in the savings rate. Thus, the study seems to suggest that cash-transfers to women are more effective in specific cases. For instance, the data shows that transfers to women are more likely to be beneficial when human capital, rather than physical capital or land, is the most important factor of production.
The paper can be downloaded here:
This paper by Esther Duflo provides an excellent synthesis of many of the concepts studied above. In the essay, she explores the close relationship between women’s empowerment (defined as improving the ability of women to access the constituents of development—in particular health, education, earning opportunities, rights, and political participation) and economic development. She concludes that although deeply interconnected, the relationship between economic development and women’s empowerment is not mutually reinforcing. She explains why economic development alone is insufficient to ensure significant progress in women’s empowerment even when women’s empowerment has shown to lead to an improvement in economic growth. Finally, she suggests necessary policy actions to create a more equal economic system.
The paper can be dowloaded here:
More interesting sources:
- Why are women paid less than men?
- Mind the Gap: Gender Equality and Trade in Africa
- Analyze This! Empowering Women
- Feminist Economics of Inequality, Development, and Growth
- Economic Growth and Evolution of Gender Equality
- The Role of Female Education in Economic Growth of Pakistan: A Time Series Analysis from 1990-2016
- How Fewer Women in Politics Impacts Policy and the Economy
- Effects of Female Political Participation on Economic Growth: Evidence from Asian Countries
- Female Legislators and Economic Growth: Evidence from State Elections in India
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