The Cost of Gender Inequality

This piece, first published on October 22, 2014, is being republished as part of the Chicago Policy Review‘s 20th Anniversary Series. Please visit us here to learn more about the series from our Executive Editors.

Throughout the world women often receive less education and are not employed at the same rate as their male counter parts. In the United States, there are nearly twice as many men as women with professional or doctoral degrees, and 70.5 percent of men either have a job or are looking for one compared to just 58.1 percent of women. And in countries like Yemen, gender disparities are seen even in secondary school where boys enroll at a rate 20 percentage points higher than girls.

There are many potential variables that could account for this inequality – societal norms, gender discrimination, or the challenges surrounding childcare – but what is becoming more obvious is that this gap is negatively impacting entire populations. Beyond issues of gender equity and human development, research points to damaging economic consequences for regions with large gender gaps in education and employment.

In their empirical analysis of regions around the world between 1960 and 2000, authors Stephan Klasen and Francesca Lamanna expound upon the growing body of research indicating that gender gaps in education and employment have negative economic consequences. Overall, the authors find that reducing gender gaps is correlated to positive regional economic growth.

The authors compare economic growth rates to education and employment gaps for several regions including the Middle East and North Africa, Latin America and the Caribbean, East Asia and the Pacific, Organization for Economic Co-operation and Development, South Asia, Sub-Saharan Africa, and Eastern Europe and Central Asia. They confirmed that gender gaps in education and employment create statistically significant regional economic inefficiencies. They also provide insight into which regions have been hurt the most by their respective gender gaps and why this may be the case.

The authors outline several explanations for why a gender gap in education and employment could lower economic development. Previous studies suggest that two primary reasons the education gap is harmful to the economy are inefficient uses of human capital and increased fertility rate.By excluding women from various forms of higher education, regions reduce their productivity.Women that could be valuable assets to the economy are not achieving their full capabilities in the labor market, and the economy suffers because its human capital is limited and competition is reduced.

Arguably more vital to economic success is the population shift due to fertility rates. Previous research shows that low levels of education are highly correlated with higher pregnancy rates. This leads to populations with a labor force that cannot support the rest of the population. By contrast, regions with a low education gender gap have shown what Bloom and Williamson (1998) call a “demographic gift,” meaning there will be more active than inactive individuals in the labor force, thus boosting economic productivity.

Klasen and Lamanna also note that previous research indicates that a high employment gender gap reduces the talent pool for prospective employers. This underutilization of human capital and labor has a negative impact on overall economic efficiency. Research suggests this is especially true of manufacturing export-based economies that depend on a high degree of labor. There is also evidence to suggest that women with the ability to make financial decisions tend to save more, are less prone to corruption, and tend to spend money on investments like healthcare and education, which leads to positive economic growth.

The study by Klasen and Lamanna reveals that South Asia (SA), the Middle East and North Africa (MENA), and Sub-Saharan Africa (SSA) have large economic and education gender gaps correlating with weak economic growth. MENA and SA are reducing their education gaps and could see a demographic gift soon, but the countries have suffered more than regions near them, likes East Asia, that have done a better job reducing their gender gaps. In addition, the MENA region has reduced its education gap faster than SA, leading to more economic growth. In SA, only Bangladesh worked to reduce its gender gaps and has experienced an economic boom similar to East Asia.

Given the current data, it would be advisable for countries to enact policies that reduce their economic and education gender gaps. Persistent gender gaps not only impact women, but are damaging to the socioeconomic development of entire populations. From this perspective, gender inequality is a disadvantage to societies that must compete in global markets where countries around the world are taking steps to decrease gender gaps and improving their economies.

Article source: Klasen, Stephan, and Francesca Lamanna. “The Impact of Gender Inequality in Education and Employment on Economic Growth: New Evidence for a Panel of Countries.” Feminist Economics, 2009.

Featured photo: cc/(Graeme Wilcot)