Speech: Catalyst for Change: Empowering Women and Tackling Income Inequality by Christine Lagarde, IMF Managing Director
IMF News, October 22, 2015
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- Speech: Catalyst for Change: Empowering Women and Tackling Income Inequality by Christine Lagarde, IMF Managing Director
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- Published: October 22, 2015
Introduction
- Remarks by Christine Lagarde, Managing Director, International Monetary Fund; Oxfam America, Washington D.C., October 22, 2015. As prepared for delivery.
- Launch of a new IMF Staff Discussion Note—“Catalyst for Change: Empowering Women and Tackling Income Inequality”, the Fund’s third paper on gender equity in the past 2 years.
- Purpose: highlight key findings from IMF inequality work, focusing on why gender inequality matters and what policymakers can do about it.
Why Does Gender Inequality Matter?
- Inclusion is good for the economy; Fund research links distributional outcomes to growth.
- Key empirical findings:
- A 1 percentage point increase in the income share of the poorest 20 percent can lift growth by about 0.4 percentage points in the following 5 years.
- Increasing the income share of the richest 20 percent can harm growth by about 0.1 percentage points in the following 5 years.
- Eliminating employment gender gaps could boost GDP by 5 percent in the U.S., 9 percent in Japan, and 27 percent in India.
- Using a multi-dimensional Gender Inequality Index (range 0–1), moving from 1 to 0 could reduce income inequality by 10 Gini points.
- Scope of analysis: almost 140 countries over two decades, linking gender inequality in labor market outcomes and opportunities to income inequality.
Policies to Tackle Gender Inequality
- Main channels linking gender inequality with income inequality: gender gaps in labor force participation and education; importance varies across country groups.
- For emerging market and low income countries — policies to expand opportunities:
- Investing in health and education:
- Increasing education spending by 1 percent of GDP in India could boost female labor force participation by 2 percentage points.
- Improving access to infrastructure and finance:
- In many low income countries, microfinance has helped to reduce the gender productivity gap.
- Removing legal barriers:
- An IMF staff paper found that constitutionally granting gender equity could increase the number of women in jobs by 5 percent; demonstrated in Peru and Namibia.
- For advanced countries — policies to increase economic participation:
- Introducing paid parental leave for both mothers and fathers and providing high-quality, affordable childcare:
- Reducing the cost of childcare by half could increase the number of young mothers in the labor market by 10 percent.
- Japan has incorporated such measures into budgets; a million more Japanese women have joined the job market.
- Raising women’s pay:
- Currently, women earn just three-quarters of what men earn, even with the same level of education and in the same occupation.
- Replacing family taxation with individual taxation to reduce marginal taxes on secondary earners and encourage women to work.
- Overall policy implication: creating opportunities for women and promoting their economic participation also helps tackle income inequality.
Conclusion
- Call for sustained growth and stability through strengthened inclusion and empowering women.
- Suggestion of collaboration between Oxfam and the IMF on mutual interests related to gender inclusion and inequality.
- Reference cited in the remarks: Causes and Consequences of Income Inequality: A Global Perspective. Era Dabla Norris, Kalpana Kochhar, Frantisek Ricka, Nujin Suphaphiphat, and Evridiki Tsounta. IMF 2015.
Source: Speech by Christine Lagarde, Managing Director, IMF; Oxfam America, Washington D.C., October 22, 2015.