IMF Research on Closing the Gender Gap
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- Authors: ERA DABLA-NORRIS, KALPANA KOCHHAR
- Published: March 1, 2019
Overview
- Gender inequality is framed as both a social justice and a significant economic issue.
- Women constitute almost half of the world’s working-age population of nearly 5 billion people.
- Female labor force participation is about 50 percent, compared with 80 percent for men.
- Women are disproportionately employed in the informal sector, earn less than men even with similar education and job, spend less time in paid labor (leading to lower pensions and higher old-age poverty risk), are underrepresented in senior positions and entrepreneurship, and shoulder a higher share of unpaid family work.
Macroeconomic and productivity findings
- Early IMF estimates: losses from economic disempowerment of women ranged from 10 percent of GDP in advanced economies to more than 30 percent in South Asia and in the Middle East and North Africa.
- Newer research finds that men and women bring complementary skills and perspectives; increasing women’s employment boosts growth and incomes more than previously estimated (Ostry and others 2018).
- Among countries with the largest participation gaps, closing them adds 35 percent to GDP, on average.
- Four-fifths of the gains come from adding workers to the labor force.
- One-fifth of the gains arises from the boost to productivity from greater gender diversity.
- Increasing women’s labor force participation produces large gains in economic welfare that account for consumption goods, home production, and leisure time; these gains exceed 20 percent in South Asia and the Middle East and North Africa.
- When more women participate, men also benefit due to higher productivity raising wages for everyone.
Evidence from firms, finance, and governance
- Gender-balanced corporate boards improve firm performance, especially in high-tech manufacturing and knowledge-intensive services.
- Gender diversity on boards of banking supervision agencies is associated with greater financial stability (Sahay and Čihák 2018).
- Banks with higher shares of women board members have thicker capital buffers, a lower proportion of nonperforming loans, and greater resistance to stress.
- Globally, women hold fewer than 20 percent of board seats in banks and bank supervision agencies and account for fewer than 2 percent of bank CEOs.
- In the tech sector, women are 15 percent less likely than men to be managers and professionals and 19 percent more likely to be clerks and service workers.
Risks from technological change and automation
- Digitalization, artificial intelligence, and machine learning are hollowing out routine, repetitive jobs and increasing the value of management and cognitive-skill jobs.
- Women perform more routine tasks than men across all sectors and occupations, with significant cross-country variation.
- Displacement risk is particularly high for less-educated women, those aged 40 and above, and those in low-skill clerical and sales jobs.
- Women across sectors are underrepresented in professional and managerial positions that are at lower risk of displacement.
- Given current technology, an estimated 26 million women’s jobs in 30 countries (28 countries in the Organisation for Economic Co-operation and Development plus Cyprus and Singapore) have a greater than 70 percent chance of being displaced by technology within two decades.
- On a global scale, this suggests that 180 million women’s jobs are at risk.
- While more men than women are at risk in absolute numbers, the number of female jobs lost represents a larger proportion of the female labor force.
Policy recommendations (three broad areas)
- First, policies to bring more women into the workforce
- Use institutional, legal, regulatory, and fiscal levers to foster opportunity and remove barriers; prioritize policies and infrastructure that ease reconciliation of work and family life.
- Emerging market and developing economy examples and evidence:
- Invest in infrastructure: electrification in rural South Africa increased female labor force participation by 9 percent; sanitation in India narrowed gender gaps in education and in female labor force participation; Mexico introduced public buses exclusively for women to improve travel safety.
- Support female entrepreneurs by increasing access to finance: examples include Malaysia’s Women Entrepreneur Financing Programme and Chile’s simplified deposit accounts.
- Promote equal rights for women by addressing inheritance and property laws: Malawi, Namibia, and Peru revised legal frameworks and subsequently saw substantial increases in female labor force participation.
- Advanced economy recommendations:
- Push for greater parity between maternity and paternity leave: Sweden’s experience helped mothers return to work more rapidly and shifted parenting norms.
- Promote access to affordable, high-quality childcare: Japan expanded childcare leave benefits from 50 percent to 67 percent of salary. Research shows cutting the cost of childcare by half could increase the number of young mothers in the labor market by 10 percent.
- Adopt tax policies that do not penalize the secondary earner by replacing family taxation with individual taxation (examples cited: Canada, Italy, Sweden); use tax relief measures for low-income families (examples cited: earned income tax credit in the United States; tax credits and transfers in Belgium, Germany, and the United Kingdom).
- Second, policies to provide women with the right skills and to empower women in the workplace
- Ensure gender parity in investments in education and health to enable quality job access.
- India-specific finding: female labor force participation would rise by 2 percentage points if Indian states increased education spending by 1 percent of GDP.
- Promote lifelong learning via fiscal instruments: tax deductions for training (Netherlands), portable individual learning accounts (France); consider subsidizing training through payroll taxes and public grants.
- Facilitate advancement into managerial and leadership roles via recruitment and retention targets, promotion quotas (as in Norway), mentorship, and training programs.
- Address digital gender gaps: 60 percent of the global population still have no access to the internet; 250 million fewer women are online than men. Public and private investment is essential for technological adoption. Finland’s comprehensive approach to universal broadband, digital education, and digital access to business and government services is cited as a model.
- Third, easing transitions for displaced workers
- Ensure equal support for displaced men and women through labor market policies that improve skills, connect workers with jobs, and promote job creation.
- Adapt social protection systems to more flexible forms of work, such as telework.
- For deteriorating income security from technological change, some advanced economies may consider expanding noncontributory pensions and adopting basic income guarantees.
Implications and IMF role
- Recent decades have seen considerable progress, but substantial work remains to close gender gaps.
- Policymakers, governments, and corporations increasingly recognize the economic benefits of gender equality and are seeking policy and practice improvements.
- The IMF commits to working with international organizations, governments, civil society, and the private sector to reduce barriers through policy advice and analysis.
Authors
- Era Dabla-Norris — deputy director in the IMF’s Fiscal Affairs Department.
- Kalpana Kochhar — director of development policy and finance at the Gates Foundation.
IMF Finance & Development Magazine | March 2019
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