Does gender equality matter for shared growth? Andrew Morrison PRMGE April 25, 2007

Gender equality is NOT equality in outcomes Refers to equality in rights, resources and voicePRR 2001) Intrinsic and instrumental value

Outline Theoretical framework: why might we expect gender equality to promote shared growth? Macro evidence for impacts on growth and poverty reduction Microfoundations: resource allocation and productivity impacts in key markets Human capital via intergenerational impacts

Macro evidence: gender equality and poverty reduction

Macro evidence: gender equality and economic growth

Gender equality in rights Expected to productivity Strong evidence on property rights generally But no research on impacts of improving womens property rights on productivity at the macro level

Gender equality in voice No empirical evidence that increased womens political participation affects growthnor is there any clear theoretical rationale as to why this should be the case. Mixed evidence about impact of political participation on allocation of public expenditure

Gender equality in resources (opportunity) Much attention to equality in educational access Cross country regressions based on augmented Solow model (Klasen, Dollar and Gatti, others) Striking results: gender gaps account for more than 1/3 of the slower growth in output in Africa than in East Asia BUT serious issues with cross country growth regressions: – Atheoretical additions to Solow model – Endogeneity issues: gender equality affects growth, but growth also affects gender equality Beyond education: wage gaps and occupational segregation

Microfoundations: access to credit Differential treatment in credit market might result from: – Gender differences in characteristics relevant for loan qualification – Prejudicial tastes by lenders – Statistical discrimination Evidence on loan denial rate/interest rates – OECD evidence shows little effect of gender after accounting for covariates – Little evidence from developing countries, but it supports conclusion from OECD studies

Issue seems to be one of differential application rates – Is non-participation due to women not satisfying eligibility criteria? – Or to women opting out because of perceived discrimination? – Or to women having no need for credit?

Microfoundations: access to land Womens land rights are frequently circumscribed in practice even if not in principle. Effect of land reform and titling programs: potential to strengthen womens rights, but generally not in practice Gender differentials in farm productivity may be due to differential tenure security, but also may result from other factors

Microfoundations: labor force participation Source: Key Indicators of the Labor Market, 4th edition

Globally, female LFPRs have not changed much in last 10 years But substantial increases in LAC and MENA, and sharp declines in ECA and East Asia

Barriers to female LFP Education levels Time burden of domestic responsibilities Wage gaps (dynamic disincentive) Discrimination in other markets (land, credit) Culture

Human capital via intergenerational impacts First generation: increased control over resources by mothers results in more spending on childrens health and education Second generation: impact of pensions, CCTs and microcredit

Summing up… Only weak evidence that gender equality matters for macro growth or poverty alleviation. Next generation work should focus on country-level analytics: – Growth distribution dynamics: counter-factual simulations based on alternative specifications for sex-disaggregated earnings, education, occupational choice, fertility, etc. – Gender-disaggregated MAMS (Maquette for MDG Simulations) modeling that incorporates existing MDG3 indicators and complementary indicators developed

Evidence on gender equalitys impact on productivity (microfoundations of growth) is suggestive but not conclusive Much stronger evidence that gender equality matters for household poverty reduction