Closing the gender gap

• Author: Era Dabla-Norris - Kalpana Kochhar
• Position: ERA DABLA-NORRIS is a division chief in the IMF's Fiscal Affairs Department, and KALPANA KOCHHAR is director of the IMF's Human Resources Department
• Pages: 8-11

As girls, we were raised with t he

belief that we could accomplish

anything, and that no barrier

was insurmountable. Yet, for

so many women, the reality

doesn’t quite meet their aspi-

rations. ings weren’t exactly

equal in the relatively conser-

vative middle-class society

in India where we both grew

up. But we thought of gender

inequality as la rgely an issue of

social justice. It was only a fter we started delving

into the topic that we came to realize t hat it is an

equally significant economic issue.

Women make up almost half of the world’s

working-age population of nearly 5 bill ion people.

But only about 50 percent of those women partic-

ipate in the labor force, compared with 80 percent

of men. Not only is female labor force participa-

tion lower, but women who are paid for their work

are disproportionately employed in the informal

sector—especially in developing economies—

where employers are subject to fewer regulations,

leaving workers more vulnerable to lower wages

and job losses. Furthermore, even in the formal

sector, women doing the same work and having

the same level of education earn less than their

male counterparts . And, because women generally

spend less time in the paid labor ma rket, they have

lower pensions and face a higher risk of poverty

in old age. Among those who do work, few rise

to senior positions or start their own businesses.

Women also shoulder a higher share of unpaid

work within the fami ly, including childcare a nd

domestic tasks, which c an limit their opportu-

nity to engage in paid work and constrain their

options when they do.

e IMF’s research highlights how the uneven

playing field between women and men imposes

large costs on the global economy. Early IMF

studies on the economic impact of gender gaps

assumed that men and women were likely to be

born with the same potential, but that d isparities

in access to education, health care, and finance

and technology; legal rights; and social a nd cul-

tural factors prevented women from rea lizing that

potential. In turn, these barriers facing women

shrank the pool of talent available to employers

(Kochhar, Jain-Cha ndra, and Newiak 2017). e

result was lower productivity and lower economic

growth. e losses to an e conomy from economic

disempowerment of women were estimated to

range from 10 percent of GDP in advanced econ-

omies to more than 30 percent in South Asi a and

in the Middle East and North Africa.

More recent research suggest s that the economic

benefits of bringing more women into the labor

force exceed previous estimates. is is because

women and men may have the same potential,

but they bring different skills and ideas—that

are economically valuable—to the table (Ostry

and others 2018). Gender differences m ay reflect

social norms and their impact on upbringing,

social interactions, risk preference s, and response

to incentives. For instance, studies have found

women to be more risk averse, reflecting greater

fear of failure, and less competitive. Women’s

greater caution has benefits: gender-balanced

corporate boards improve firm per formance,

Hard-won gains from policies to increase the number of

women in the paid workforce and close wage gaps may be

quickly eroded if women are overrepresented in jobs at

high risk of automation.

8 FINANCE & DEVELOPMENT | March 2019