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Gender Equality and Income Level

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Table of contents

  1. Gender Equality, Economic Growth
  2. Gender Equality Contributes to Overall Greater Income Distribution
  3. Bibliography

Feminism or gender equality, a current hot topic that is all over the media and that every day we heard something related to it. However, what we understand with Feminism?

To answer this question, I personally prefer to define it as: equality in the social, political and economic environment among sexes. This definition comes from the one of Feminist that Chimamanda Ngozi Adichie gave in the “We should all be feminists” TED talk, in which she said that: “Feminist: A person who believes in the social, political and economic equality of the sexes” (Adichie, 2012). Nevertheless, a lot of people still do not understand this term as it is usually mistaken with the contrary of sexism.

With this essay, I am not only intending to show how we can measure gender equality and why it is important, but also, proved wrong the popular belief that developed or high-income countries are the most equal ones and that culture, or the social environment has an important burden in this topic.

Before, describing why all countries should aim to achieve gender equality and the importance of the female role in the economy, I would like to begin with this speech: “Human rights are women´s right and women´s rights are human right once and for all. Women must enjoy the rights to participate fully in the social and political lives of their countries.” (Clinton, 1995)

To ensure that all countries contribute to that and that gender equality is achieved, in 2015, the 193 members of the United Nations, adopted the 2030 Agenda for Sustainable Development, which included 17 Sustainable Development Goals. The goal number five is Gender Equality, which aims to empower all women and girls, by:

  • Ending discrimination against women and girls.
  • Ending all violence against and exploitation of women and girls.
  • Eliminating forced marriages and genital mutilation.
  • Valuing unpaid care and promote shared domestic responsibilities.
  • Ensuring full participation in leadership and decision-making.
  • Universal access to reproductive health and rights.
  • Equal rights to economic resources, property ownership and financial services.
  • Promoting empowerment of women through technology.
  • Adopting and strengthening policies and enforceable legislation for gender equality.

Gender equality is not just the fight for achieving full human right for women and girls but also, fighting for the huge waste of human potential that is cause by the denial of those rights to women. Reaching female political, economic and social equality will provide enormous benefits for the whole society. As the Director of the International Monetary Fund, Christine Lagarde, said in 2014: “All economies have savings and productivity gains if women have access to the job market. It´s not just a moral, philosophical, or equal-opportunity matter. It just makes economic sense.” This Fourth Industrial Revolution offers an unprecedent wide range of opportunities and new challenges. To reach the full potential of this new technologies, we need also the full human potential, so we cannot afford to leave out the ideas, skills and perspectives of half of the population.

Even though women and girls have gained ground in the economy and society, gender equity is not achieved, and gender inequality prevails as important setback for human development. Some sources of inequality are health, education, labor market participation, political representation… which all have negative impact on their freedom of choice.

The representation of women in politics (as ministers, parliamentarians or heads of state) is determining for accomplishing gender equality. It has been proved that greater number of women in leadership positions increases the investment on health, education, community infrastructure and ending poverty. Therefore, empowering women will affect the way the world works today, which improves development. However, economic development itself cannot achieve gender equality in all dimensions and not until like-minded men join this cause, there will not be a decisive change.

A greater proportion of girls in the educational system, and therefore higher female literacy rates, contributes to women´s economic empowerment. It not only provides more upskilled labor force to keep up with the fast-technological developments, but also, offers better income-generating opportunities and participation in the labor market, which improves their wellbeing and their access to health and other services.

Empowering women, through education and higher participation in high income positions, will improve children´s welfare as they tend to invest a greater part of their income in their families’ health, nutrition, education and overall wellbeing. This will imply that newborn girls will have better opportunities than their mothers to earn and control their own income. Also, there will be higher levels of female school enrollments which would imply smaller educational gap between boys and girls. It has been found that there is significant positive relationship between female education and output per worker, what means that there is an increase in productivity and so, an increase in economic growth. Therefore, educational gender gap is one of the most important obstacles to economic development. According to Klasen and Lamanna (2008), lower female education and employment rates are the cause of a 1.6 percent differences in annual growth rates between South Asia and East Asia. Moreover, half of the economic growth of the OECD countries can be linked to the increase in educational attainment during the past 50 years.

Greater gender inequality is associated with higher GDP per capita, rising economic growth rates, which indeed leads to greater income inequality, and better national competitiveness and economic diversification, which all contributes to economic resilience.

Gender inequality persists in some low-income countries where there are discriminatory social institutions and norms that hamper women empowerment. In India, the Middle East or North Africa, there are still cultural practices or norms, like the preference for sons or the concern for women´s “purity”, that limit opportunities for women or their freedom of choice. However, economic development is expected to change these cultural norms which would improve gender equality.

Western Europe, North America, Eastern Europe and Central Asia, and Latin America and the Caribbean, are the regions with the highest level of gender equity. While South Asia, and Middle East and North Africa the ones with lower gender parity. However, it is expected that the gap closes in 61 years in Western Europe, 70 years in South Asia, 74 years in Latin America and the Caribbean, 124 years in Eastern Europe and Central Asia, 153 years in Middle East and North Africa, and 165 years in North America.

Now, in this section, we are going to examine why women equality is important for the economy and how gender equality boost growth and promotes economic stability.

Gender Equality, Economic Growth

Lower gender inequality increases female participation in the labor market which contributes to a strong, sustainable and balanced economic growth in the long run. Greater presence of women in the labor market allows a better use of the available talent pool plus a more efficient allocation of resources and an increase in productivity that leads to a higher GDP growth. This female incorporation to the labor force is due essentially to the increase in the service sector, the technological advances in the domestic and private sectors, and the reduction of childbearing risk and frequency. This inclusion into the labor market improves women’s and girls’ personal autonomy. The increase of the labor force is key important to fight the aging of population, it can soften the negative effect on the shrinking labor supply. This positively impacts the sustainability of the pension system as it ensures stable economic growth by including more skilled labor as a result of higher female education.

According to the OECD, increasing the participation of women in the labor market can rise the GDP by 12 percent during the next 15 years. Moreover, gender gaps in the labor market can be directly attributable to a 27 percent decrease in the GDP per capita in some regions. In addition, if no women were in the labor market, it is expected that GDP per capita losses would be of 47 percent in the short run and 50 in the long run. According to Cuberes and Teignier there are some public policies that can boost the gender equality in the labor market: promoting gender neutral legal business frameworks, equal access to finance, relaxing administrative burdens and redundant regulatory restrictions, and guaranteeing fiscal, financial and legal advice and training.

It has been discovered that economic growth originated by reducing poverty and increasing opportunities have a significant positive impact on gender equality. Moreover, it has been discovered that the positive relationship between gender equality and growth goes beyond education and it is different depending on the countries’ income level. It is expected to hold better in low income economies than in high income ones.

Gender Equality Contributes to Overall Greater Income Distribution

Greater gender equality is positively related with lower income inequality. Reducing gender wage gaps directly impacts income inequality, which contributes to a sustainable growth. It is expected that closing this gap could increase female per capita income in 23 percent in the OECD countries.

Higher female participation in the labor force lowers earning inequality between sexes, contributing to less pension’s inequality in the future. However, women tend to work in the grey economy which is associated with lower wages that contributes to the aggravation of income inequality. On the other hand, the unequal access to health services, education, financial markets and resources also contributes to greater income inequality. The differences in opportunities for men and women are strongly related to gender wage gaps. For example, in most developing countries, there are still gender gaps in education and financial access. The first one unbales women to access to higher income remunerated positions which contributes to greater income inequality. The second one impedes women to have their own financial independence to start a business or to attain university or other educational institutions. This exacerbate inequality of opportunities, which in turn contributes to increasing income inequality.

It has been shown that greater employment and leadership opportunities for women and girls are associated with higher organizational effectiveness and growth. Greater share of women in senior managerial level or in corporate boards is positively related with higher profitability and low-risk corporate investments. This is due to the different and improved decision-making that women bring to firms’ boards, as they tend to be more creative, innovative, better problem solving and more emotional involved. This gender-diverse broads guarantees a wider range of points of view which improves the overall corporate productivity and reduces the possibility of a growth slowdown. It is expected that the inclusion of one more woman into a high decision-making position, can increase return on assets in 8 to 13 basis points.

Female presence in higher organizational levels is also associated with a better use of the available talent pool and a better representation of the current labor force. Moreover, female owned companies are expected to be better positioned in more orientated customer markets and a more people emphasis leadership. This all means that there would be an improvement in the nine business dimensions (Culture, Governance, Methodology, Stakeholder Management, Skills, Technology, Data, Workforce Experiences and Business Outcomes) However, it has been found that in Europe and United States is three times harder for a woman to get into a higher organizational positions than to a man.

Finally, reducing gender gaps in entrepreneurship is positive associated with a more effective allocation of resources and therefore higher productivity of small and medium size firms. It has been proved that no women in this type of business is related with a 10 percent decrease in worker’s income in the short-run and a 11 percent fall in the long-run.

Greater economic diversification increases growth, reduces volatility and increases resilience to external shocks. It has been discovered that gender inequality is negatively associated with output and export diversification in developing countries. Therefore, greater gender equality reduces the risk from export specialization.

Higher presence of women in banks boards is positive related to greater bank stability. It has been discovered that greater share of women in banks are positive associated with bigger capital buffers and lower non-performing loans.

To summarize gender equality has a lot of benefits to society, especially in the economic field.


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