Gender Inequality and Economic Growth:

A Cross-Country Analysis
STEPHANIE SEGUINO *
University of Vermont, Burlington, USA
Summary. This paper investigates empirically the determinants of economic growth for a set of
semi-industrialized export-oriented economies in which women provide the bulk of labor in the
export sector. The primary hypothesis tested is that gender inequality which contributes to womens
relatively lower wages was a stimulus to growth via the eect on exports during 197595. Empirical
analysis shows that GDP growth is positively related to gender wage inequality in contrast to recent
work which suggests that income inequality slows growth. Evidence also indicates that part of the
impact of gender wage inequality on growth is transmitted through its positive eect on investment
as a share of GDP. 2000 Elsevier Science Ltd. All rights reserved.
Key words gender, inequality, economic growth, semi-industrialized economies, export-led
growth
1. INTRODUCTION
In recent years, there has been increased
interest in the eect of shifts in income distri-
bution on economic growth.
1
Furthering that
eort, economists who incorporate feminist
perspectives in their work are beginning to
build a body of work that extends analysis to
consider the ways in which the distribution of
income by gender can inuence short- and
long-term macroeconomic outcomes.
2
The relevance of gender as a macroeconomic
variable has not yet been widely embraced by
the economics profession, however. As a result,
research emanating from the recently renewed
academic interest in the determinants of
economic growth is virtually devoid of a
gendered perspective (Barro & Sala-i-Martin,
1991; Grossman & Helpman, 1991; Kim & Lau,
1996). Nor, on the empirical side, does the spate
of cross-sectional growth accounting studies
that followed on the heels of new growth theory
consider gender a signicant explanatory vari-
able.
3
The research presented here is an eort
to ll the latter lacuna. In particular, this study
investigates empirically the impact of gender
inequality on economic growth.
A basic premise of this research is that the
eects of gender on growth are likely to depend
on the structure of the economy. The focus of
the research presented here is therefore limited
to a set of semi-industrialized countries with
data covering 197595. The countries in the
sample are similar in that they have adopted, to
varying degrees, an export orientation with a
large share of exports produced in female-
dominated manufacturing industries. Through
a growth accounting strategy, we examine the
relevance of gender inequality for explaining
GDP growth rates, using panel data and a
variety of well-established conditioning vari-
ables.
This task is humbly embarked on, owing to
the data diculties and conceptual problems
associated with doing cross-country analyses.
The very modest goal is to determine whether
there are any empirical regularities in the data
that link gender inequality, through its eects
on gender wage dierentials and education,
with economic growth over time and across
countries. The main hypothesis tested is that
gender inequality which works to lower
World Development Vol. 28, No. 7, pp. 12111230, 2000
2000 Elsevier Science Ltd. All rights reserved
Printed in Great Britain
0305-750X/00/$ - see front matter
PII: S0305-750X(00)00018-8
www.elsevier.com/locate/worlddev
*Excellent research assistance was provided by Chris
Cichoski. The study was made possible by funding from
the University of Vermonts Deans Fund and University
Committee on Research and Scholarship. Helpful
comments were provided by Ric McIntyre, Elaine
McCrate, two anonymous referees, and members of
the Engendering Macroeconomics and International
Economics Working Group.
1211
women's wages relative to mens is a stimulus to
growth in export-oriented economies. We also
investigate the possibility that the growth eect
of gender wage dierentials is transmitted via
the stimulus to investment, serving as a signal
of protability. Empirical results support both
of these hypotheses.
These ndings contrast sharply with recent
work which suggests that income inequality,
measured at the household level (where female
and male income is pooled, thereby obscuring
income inequality along gender lines) impedes
growth because it produces social conict. The
economic eects of conict, it is argued in that
work, are transmitted through the negative
impact on investment and macroeconomic
policy. These diering results may be reconciled
by recognizing that inequality is less likely to
produce social conict if the burden is born by
women, a group traditionally socialized to
accept gender inequality as a socially accept-
able outcome.
This research is presented as follows. Section
2 discusses the mainstream literature on the
theory and empirics of economic growth. The
theoretical underpinnings of the role of gender
as a macro variable are then taken up. Section 3
lays out the growth accounting approach used
in this paper and presents descriptive data.
Section 4 presents the regression results.
Section 5 summarizes and suggests avenues for
future research.
2. GROWTH THEORY, GROWTH
ACCOUNTING, AND GENDER
(a) Recent developments in growth theory
The brief review of developments in the
growth theory literature presented here is not
meant to be exhaustive, but rather, highlights
those areas of thought and empirical work
relevant to an investigation of the relationship
between growth and gender. Earlier economic
growth models focused attention on the posi-
tive role that accumulation of capital and labor,
and technical progress play in increasing per
capita output. Since the 1980s, economists have
turned attention to the determinants of tech-
nical progress which had previously been
modelled as exogenous.
Numerous researchers have emphasized the
importance of trade and trade policies in
inuencing technical progress and thereby the
rate of economic growth. There are several
avenues by which trade is thought to stimulate
growth. Exports provide the foreign exchange
to license technology or gain access to imports
of intermediate and capital goods that embody
new technology, thereby raising aggregate
productivity (Grossman & Helpman, 1991;
Romer, 1991).
4
In addition, exports permit
economies of scale and specialization (assuming
a limited home market) that raise productivity
and therefore output. Macro policies that
promote openness to trade are also hypothe-
sized to play a positive role. For example,
economic openness is argued to contribute to a
competitive economic environment, promoting
allocative eciency, and thus enhancing output
per worker (World Bank, 1991).
5
The results of empirical tests on the rela-
tionship between trade and growth are mixed,
however. While some research nds a robust
relationship between exports and growth, trade
policy measures are less consistently signi-
cantly related to growth (e.g., Levine & Renelt,
1992; Harrison, 1995; Rodriguez & Rodrik,
1999). The empirical results suggest that if there
is a positive relationship between trade and
growth, that nexus is related to the ability of
exports (not economic openness per se) to help
countries overcome balance-of-payments
constraints and to obtain the foreign exchange
to purchase best practice technology (e.g.,
Esfahani, 1991).
Some evidence indicates that exports alone
are insucient to promote growth and that
growth depends on a variety of additional
factors. For example, some studies nd growth
to be positively aected by exports in semi-in-
dustrialized economies only when the latter
variable is interacted with a measure of human
capital (Edwards, 1992; Levin & Raut, 1997).
This nding suggests that exports are associ-
ated with gains in output primarily for those
countries with sucient human capital to
absorb new technologies.
In addition, economic structure appears to
inuence the way and degree to which trade
aects growth. For example, some studies nd
that the ratio of manufactured exports to GDP
has a positive eect on growth whereas primary
commodity exports to GDP do not (Levin &
Raut, 1997; Sachs & Warner, 1997). This might
be explained by the fact that the intermediate
and capital goods imports required to produce
manufactured goods in a semi-industrialized
economy embody technology, producing an
export import growth link. Countries
specializing in primary commodity exports,
WORLD DEVELOPMENT 1212
however, import mainly nished manufactured
goods which have few spillover eects on
productivity and output growth.
6
Finally, some authors note that the spectac-
ular growth of exports in some Asian econo-
mies may not have been the primary causal
factor in stimulating growth. For instance,
according to Rodrik (1994, 1995), rapid export
growth in Korea and Taiwan was stimulated by
an investment boom. The surge in investment
was itself precipitated, it is argued, by a variety
of state-level policies and domestic economic
conditions that raised the protability of
investment, and provided the savings to
purchase imported capital goods (Amsden,
1989; Wade, 1990). It is therefore dicult to
disentangle the role of exports in stimulating
growth since while they provide the foreign
exchange to purchase imported goods, the
demand for those goods is driven by investment
which requires a climate that promotes positive
prot expectations.
In addition to the the recent focus on trade,
mainstream growth theory has begun to
consider the causal eect of income distribution
on growth. Of particular interest are several
papers which present models and empirics
indicating that income inequality can produce
social conict that may retard economic growth
(Alesina & Rodrik, 1994; Persson & Tabellini,
1994; Larran & Vergara, 1998). Two avenues
by which income distribution aects growth are
advanced in that work. The negative growth
eects of income inequality may be transmitted
through the eect on investment where the
potential social conict that inequality signals
can create uncertainty that dampens investment
(Larran & Vergara, 1998). Further, income
inequality may produce political conict that
policy makers attempt to the placate with
growth-inhibiting macro policies.
The empirical studies of the relationship
between income distribution and growth rely
on household data, and therefore do not
capture income inequality along gender lines in
a number of countries.
7
In particular, while
household data indicate relative equality in
rapidly-growing Asia, the degree of gender
inequality is among the highest in the world
(ILO, various years). In order to make deni-
tive statements about the causal relationship
between income distribution and growth then it
would appear necessary to account for the
eect of gender inequality. The role of gender in
stimulating growth is taken up in more detail in
the next section.
(b) Gender and growth
Feminist scholars maintain that gender is an
important macroeconomic variable and that
gender relations can aect economic develop-
ment and growth. The state of gender relations,
which frequently results in divergent outcomes
by gender, is readily observable in several
economic arenas: (i) job segregation within the
paid labor market, (ii) the division of labor
between paid and unpaid labor, (iii) the distri-
bution of income and resources within the
household, (iv) access to the redistributions by
the state, such as access to education and social
safety net programs, and (v) credit in nancial
markets. The eect of gendered economic
opportunities is that women and men on aver-
age occupy dierent class positions, with
women more likely to the be poor, malnour-
ished, less educated, and overworked relative to
the men (Davis, 1981; Benera & Roldan, 1987;
Deere, 1990; Wright, 1996).
8
Gender inequality is neither constant over
time nor across countries. Institutions change
as a result of collective action, and the eects
are observable (though not unambiguously so)
on a number of measures such as gender wage
dierentials and employment rates, hours of
paid and unpaid work, rates of unemployment,
educational attainment, and other more
concrete measures of well-being such as life
expectancy rates and the ratio of females to
males in the population.
What are the implications of gender
inequality for economic growth? A growing
body of research has laid the foundation at the
macro level for understanding how gender
might aect the pace of economic growth.
9
In
this paper, we focus primarily on the causal
mechanisms linked to job segregation in the
paid labor market, wage dierentials, and,
subsidiarily, to education.
Job segregation by gender is a pervasive
characteristic of most economies (Jacobsen,
1997), but the distribution of jobs by gender
can only in part be explained by correlations
between gender and education. Women tend to
be ``crowded'' into lower paying jobs, explain-
ing a portion of the widely observable gender
dierential wage rates by job and industry.
10
If women are crowded into industries that
produce price elastic goods, this practice may
have implications for trade patterns and
economic growth (Blecker & Seguino, 1999).
For example, in the case considered here, job
segregation that crowds women into export
GENDER INEQUALITY AND ECONOMIC GROWTH 1213
industries where price elasticities of demand are
relatively high may articially lower womens
wages, due to their restricted bargaining power.
The resulting gender wage dierentials (taking
the male wage as a benchmark) may be a
stimulus to export expansion.
Insofar as growth empirics have accurately
detected a relationship between exports, tech-
nical progress, and growth, we can hypothesize
that gender inequality has a positive eect on
technical progress and growth whereby export
earnings provide the resources to purchase
sophisticated technologies. The linkage
between gender inequality and economic
growth then can be summarized as: gender
inequality export expansion technical
change economic growth. It should be
emphasized that the hypothesized eect of the
gender wage gap on growth is likely to be
inuenced by the structure of the economy.
Here the gender inequality hypothesis pertains
to semi-industrialized countries as compared to
commodity-dependent exporters or industrial-
ized countries which have access to domesti-
cally-generated technical knowledge.
Low wages (for women, in our case) that
stimulate exports may not be sucient to
promote growth. At least in the case of some
late industrializing countries, this competitive
advantage has been accompanied by a variety
of state policies and institutions that promote
learning to enable workers to integrate new
imported technologies (Amsden, 1989). That is,
in addition to export competitiveness, growth
may also be dependent upon the existence of a
skilled labor force that is able to competently
adopt new technologies. We may take account
of this by linking the level of educational
attainment with a measure of gender inequality
as a determinant of growth.
An additional link between gender and
growth is through the eect of gender wage
dierentials on the rate of capital accumula-
tion. In Kaleckian approaches, investment is a
function of protability as well as output (the
accelerator eect), with protability signaled by
the share of income going to workers. In
general, a low share of income going to workers
(implying a high prot share) is thought to be a
stimulus to investment.
11
You (1991) has
pointed out that rm responsiveness to prot-
ability may dier by sector, with investment by
rms producing nontradeables or for a
protected domestic market less sensitive to
shifts in protability than rms producing for
export. Given womens segregation in export
industries where price elasticities of demand are
high and the so-called protability eect large,
capital accumulation may be stimulated by a
drop in womens relative wages (a widening of
the gender wage gap).
This point is consistent with that made by
numerous scholars who have investigated the
relationship between gender and export-ori-
ented growth. For example, Ert urk and
Ca!gatay (1995) argue that feminization of the
labor force, associated with lower unit labor
costs, stimulates investment. Standing (1989,
1999) notes that in recent years, competitive
pressures resulting from globalization (i.e.,
greater economic openness) have induced
employers to substitute female workers for
male workers, resulting in a feminization of the
labor force. In sum, gender inequality, as
measured by gender wage dierentials, could
have a positive eect on growth via the eect on
investment under some structural conditions.
We therefore also test for the eect of gender
inequality on investment.
Further, the state of gender relations inu-
ences educational outcomes. For example,
gender relations may aect access to educa-
tional and training opportunities, inuencing
both the distribution of human capital between
women and men, as well as the total quantity
insofar as gender norms inhibit or promote
educational attainment by sex.
Several cross-sectional analyses nd that
female educational attainment has a positive
eect on economic growth (Benavot, 1989; Hill
& King, 1995). The purported link between
womens education and growth diers,
however. While Barro and Lee (1996) nd that
the growth impact of female education is
transmitted through its negative eect on
fertility, female educational investments may
also be linked to the productivity of unpaid or
reproductive labor (Hill & King, 1995). In paid
labor markets, female educational attainment is
likely to be positively related to aggregate
productivity growth. The positive eect of
female education may fall below its potential,
however, if women are sequestered in low skill
jobs despite their qualications for more skilled
positions. This practice may also constrain the
positive eect of women's education on growth.
The net eect of gendered educational
outcomes on growth is therefore a priori
unclear, at least for semi-industrialized econo-
mies, and therefore no hypotheses are advanced
as to the possible sign on these variables in the
analysis that follows. We simply note here that
WORLD DEVELOPMENT 1214
it is relevant to disaggregate human capital
variables by gender to take account of dier-
ences in types of labor which women and men
perform, and the social constraints on the
distribution of their labor.
3. CORRELATIONS BETWEEN GENDER
INEQUALITY AND GROWTH: SAMPLE,
METHODOLOGY, AND DATA
Of the multiple potential eects of gender on
growth, this paper focuses primarily on the
export-technical progress and investment links,
using a growth accounting methodology. More
precisely, gender wage dierentials are included
as an explanatory variable that is assumed to
promote technological advance and thereby
growth. We also check to see if gender wage
inequality is a stimulus to investment. These
relationships are likely to be valid only for
semi-industrialized economies, as the previous
section suggests, and in particular, those that
are export-oriented and for which women
provide the bulk of labor in export industries.
For this reason, the sample used in this analysis
(described in greater detail below) is restricted
to a group of semi-industrialized export-ori-
ented economies. In the econometric analysis, a
very typical set of conditioning variables is
used, with attention focused on the relationship
between growth and gender dierentials in
wages and education.
(a) The sample
The sample is comprised of a set of semi-in-
dustrialized countries that rely on exports as a
signicant component of aggregate demand
and for which gender-disaggregated wage data
are available. The sample is drawn from lower-
and middle-income countries as dened by the
World Development Report 1995 (World Bank,
1995). To select the sample, a semi-industrial-
ized export orientation (SIEO) index was
developed to permit the ranking of countries.
The index was created as follows: its value is
the sum of the natural logarithm of the share of
exports in GDP, the ratio of machinery and
transport goods to non-oil primary commodi-
ties in exports, and the share of manufacturing
in output.
12
The rst of these variables is an
indicator of export orientation, while the
second and third reect the degree to which a
country has attained a semi-industrialized
status. Countries with SIEO values above a
threshold value of 1.0 were included in the
sample. An additional criterion, noted above, is
the availability of gender-disaggregated wage
data. Data gaps here led a number of otherwise
qualied countries to be dropped from the
sample.
A look at the data for this reduced sample in
Figure 1 shows that the higher the value of a
countrys SIEO index, the greater its corre-
sponding average annual per capita growth rate
for 198093.
13
Further, as the data in Table 1
show, the major export industries in selected
sample countries are female-dominated.
(b) The growth accounting methodology
For consistency with previous studies, the
empirical specication of this paper is derived
from a neoclassical production function
framework, with output a function of the
capital stock, skilled-adjusted female and male
labor supply measured as human capital, and
technological progress.
14
The underlying
production function can be specied as:
Y
it
= A
it
F (KY HKF Y HKM)
it
Y (1)
where Y is output, A is technological change,
K is the capital stock, HKF and HKM are
female and male human capital, respectively, i
is the country index, and t is time.
15
The determinants of technological change
can be decomposed into: (i) country-specic
xed eects, (ii) a time eect, common across
all countries (used to pick up factors in the
global economic environment such as the oil
price shock that may inuence output), and (iii)
the eect of specic and changing country
conditions which inuence the growth rate of
exports. In the latter category, we focus on
female/male wage dierentials. More formally,
technical change can be described as
A
it
= C
i
(1 /t)e
rWGAPt
Y (2)
where C
i
is the country-specic time-invariant
eect, / measures the eect of external factors
over time that aect growth not otherwise
included in the model, WGAP is the gender
wage gap, and r is the eect of gender wage
dierentials on growth. The gender variable
then captures the impact of inequality on
growth after controlling for changes in resource
use.
Substituting (2) into (1), taking natural logs,
dierentiating with respect to time, and using
the fact that log(1 d) ~ d, yields
GENDER INEQUALITY AND ECONOMIC GROWTH 1215
d logY
it
= / Rk
i
a
1
WGAP
it
a
2
d logK
it
a
3
HKF
it
a
4
HKM
it

it
Y (3)
where d is the dierence operator, / is the
growth rate of technological change when
variables are measured at the mean, Rk
i
are
xed eects, WGAP is the gender wage gap,
HKF and HKM are female and male human
capital, respectively, and
it
is the error term,
assumed to be normal. From (2), the coecient
a
1
is equal to r.
The regressions are carried out using ve-
year averages and period averages for 197595.
Use of period averages precludes the xed
eects model and, of course, eliminates time
eects so this constrained model is less satisfy-
ing, but it is useful for comparison to other
research on the determinants of growth as well
as to the ve-year average regression results.
(c) The data
Data cover 197595. GDP is measured in
1985 prices and from this, growth rates are
calculated for the sample countries. The growth
rate of the capital stock is proxied as the
growth rate of gross domestic xed capital
formation.
16
Several measures of human capital are used.
These include the percentage of females and
males 15 and over who have completed
secondary education and the growth rate of
secondary school attainment by sex. Average
years of total and secondary education per
female and male are variously included to
represent the stock of human capital. (Regres-
sions were also run with these variables
measured in natural logs but were not signi-
cant and so are not discussed here.)
Three measures of the gender wage gap are
used. One is a basic wage gap variable,
WGAP1, measured as Log(W
M
) Log(W
F
)
where W
M
and W
F
are male and female
earnings, respectively. Earnings data are
corrected for hours worked where possible (in
most cases).
17
Table 2 provides a summary of
the gender wage gap data, measured both as
ratios (for ease of interpretation) and log
dierences, and years of country coverage.
A second measure attempts to rene the wage
gap variable by correcting gender earnings for
educational attainment. This correction gener-
ates what might be called an ``eciency''
gender wage gap because it takes into account
dierences in women's and mens secondary
educational attainment. Dubbed WGAP2, it is
measured as follows:
WGAP2 = Log
W
M
SYRM

Log
W
F
SYRF

Y (4)
where SYRM and SYRF are average number of
years of secondary education per male and
female 15 and over, respectively. A wide gender
Figure 1. SIEO index and growth rates of per captia GDP, 198093.
WORLD DEVELOPMENT 1216
wage gap, coupled with a relatively high edu-
cational attainment for women should exert a
positive eect on exports (via the eect on unit
labor costs) and thus technological change and
economic growth. In the sense that education
reects productivity, this correction may be
valid. But from another perspective, education
dierentials between women and men are
themselves indicative of gender discrimination.
This discrimination, which can contribute to
womens crowding into labor-intensive jobs,
aects wage dierentials (and of course export
costs). Furthermore, education may not accu-
rately reect productivity if factors other than
skills determine job access. Thus it is useful to
evaluate the eects of both measures of the
gender wage gap on economic growth.
Taking account of evidence of an interaction
between export growth and human capital,
another variation of the wage gap (WGAP3) is
used, and in this case, it is simply the interac-
tion of WGAP2 and average educational
attainment in the economy. The usefulness of
this measure can be understood as follows.
18
The eect of gender earnings dierentials that
raise foreign exchange earnings and access to
new technologies on growth depend on the level
of education, since skilled labor is more
conducive to the eective absorption of new
technologies (Nelson & Phelps, 1966).
It should be noted that the wage data are the
weak link in this analysis in that they are not
widely available over a long period of time and
there are dierences in coverage.
19
In some
cases where a single data point was available,
that number was used as a proxy for the ve-
year average in which it fell, under the
assumption that gender wage gaps change
relatively slowly. In that way, some of our
initial sample could be retained. Table 6 in
Appendix A gives summary data of the vari-
ables used in the econometric analysis, aver-
aged for 197595. Table 7, also in Appendix A,
lists data sources.
4. REGRESSION RESULTS
(a) Period averages
Regression results are presented rst for
cross-country regressions using period aver-
ages. Because of the limited number of obser-
vations, the main constraint is degrees of
freedom. For that reason, a limited set of
independent variables is experimented with and
attention is focused primarily on the eect of
incorporating measures of the gender wage gap.
Given the heteroskedasticity problems
Table 1. Womens share of jobs in major export
industries, selected countries 197790
a
(a)
Textiles
(b)
Cloth-
ing
(c)
Elec-
tronics
Total
(a)(c)
Colombia
1977 33.0% 80.0% NA
+
49.9%
1984 34.3 79.8 NA 55.9
1990
++
NA
Cyprus
1977
1984 66.5 83.2 45.8 78.8
1990 72.3 86.5 33.5 81.8
Hong Kong
1977 48.7 70.3 NA 62.7
1984 47.1 69.1 NA 62.4
1990 42.2 68.3 NA 60.0
Korea
1977 69.0 73.0 55.3 66.9
1984 65.7 76.7 52.0 64.3
1990 57.3 72.0 48.7 56.9
Malaysia
1977
1984 63.7 89.4 73.7 75.2
1990 57.8 85.3 75.3 75.3
Philippines
1977
1988 46.6 80.0 63.8 66.9
1990 48.4 79.6 64.9 67.9
Singapore
1977
1984 66.8 88.2 75.0 77.6
1990 58.4 87.1 71.0 73.3
Sri Lanka
1977 52.6 82.8 56.0 56.0
1984 57.5 89.1 72.8 72.8
1990 50.8 89.4 76.3 76.3
Taiwan
1977 69.3 81.4 62.5 69.1
1984 64.7 80.2 66.8 68.4
1990 64.7 80.2 54.6 58.7
Thailand
1977 NA
1984 75.0 93.0 NA 81.3
1988 75.6 81.9 NA 92.4
a
Source: Data are from ILO (various years) Yearbook of
Labour Statistics and DGBAS (1993) for Taiwan.
*
NA indicates that employment in that sector is rela-
tively low and the sector is not a major exporter.
**
() indicates that data are unavailable for that year.
GENDER INEQUALITY AND ECONOMIC GROWTH 1217
frequently encountered with cross-sectional
data, the standard errors have been obtained
with White's variance-covariance matrix in all
regressions.
Table 3 summarizes the results obtained
using the period average data. Eqn. (1) consti-
tutes a basic growth accounting equation, with
GDP growth regressed on growth of the capital
stock (d log K) and a measure of the skill level
of the labor force (HK), measured as the aver-
age years of secondary education per person 15
and over. The constant represents the rate of
technological change or other factors otherwise
unaccounted for.
20
Both independent variable
coecients are positive and signicant, as
expected.
Eqn. (2)(4) show the results of incorporat-
ing various measures of the gender wage gap.
Eqn. (2) adds the basic wage gap variable
(WGAP1). The coecient is positive and
signicant, and the remaining independent
variables are stable, although note that with the
inclusion of the gender variable, the size of the
constant term falls. The value of the coecient
on WGAP1 (0.015) indicates that a 0.10
increase in the gender wage gap leads to a 0.15
percentage point increase in GDP growth. This
eect is not insignicant. It implies, for exam-
ple, that the dierence in GDP growth rates
attributable to gender wage dierentials for two
countries in our sample, Korea (8.0%) and
Chile (5.3%), is 1.2 percentage points per
year.
21
By contrast, the eect of increasing
average human capital attainment by one year
is to raise the GDP growth rate 0.5 percentage
points.
22
Figure 2 shows the partial correlation
between the gender wage gap and growth, after
netting out the eect of the remaining inde-
pendent variables. The results suggest that in
semi-industrialized countries with an export
orientation where women are crowded into
export industries, ceteris paribus, a wider
gender earnings gap leads to higher rates of
economic growth.
The education-adjusted gender wage gap
variable (WGAP2) is substituted in Eqn. (3).
The coecient on this variable is also positive
and signicant and indicates that a 0.10 point
increase in the gap between female and male
returns per year of secondary education raises
GDP growth by 0.10 percentage points.
23
Eqn.
(4) uses WGAP3 which captures the comple-
mentarity between an export orientation and
human capital. This variable is positive and
signicant, suggesting that gender wage dier-
entials coupled with a high average educational
attainment in the economy promote economic
growth. The human capital variable becomes
insignicant, however, and this may be due to
Table 2. Mean value of gender wage gap
a
Country Period Gender wage gap measured as
W
F
aW
M
Log(W
M
) Log(W
F
)
Brazil 198894 0.533 0.878
Chile 1987 0.773 0.294
Colombia 1988 0.846 0.182
Costa Rica 197885 0.715 0.401
Cyprus 197595 0.584 0.724
El Salvador 197594 0.868 0.157
Greece 197595 0.748 0.343
Hong Kong 198295 0.684 0.348
Indonesia 198891 0.649 0.542
Korea 197595 0.482 1.071
Malaysia 198394 0.505 0.989
Mexico 198492 0.795 0.278
Paraguay 198394 0.869 0.198
Philippines 1993 0.870 0.150
Portugal 198995 0.718 0.398
Singapore 198395 0.544 0.840
Sri Lanka 198095 0.796 0.272
Taiwan 198195 0.646 0.563
Thailand 198994 0.669 0.497
Turkey 198895 0.865 0.166
a
Source: Data are from ILO (various years) Yearbook of Labour Statistics with several exceptions. Data for Indo-
nesia are from SAKERNAS (various years). For Mexico, see Alarc on and McKinley (1997) and Taiwan, DGBAS
(various years) Yearbook of Labor Statistics.
WORLD DEVELOPMENT 1218
the fact that WGAP3 incorporates a measure of
schooling that is collinear with HK.
In sum, the gender wage gap variable
performs relatively robustly in these equations.
Given the likelihood of random measurement
error of the wage gap variable leading to a
downward bias on the size of the coecient on
this variable, the implications for the positive
eect of gender inequality are likely to be even
stronger than implied by these results.
(b) Five-year averages
Most cross-country research has been limited
to analysis using data on long period averages,
but this tends to obscure variations across time
in countries. Moreover, institutional dierences
within countries cannot easily be captured in
this modeling framework. For that reason, the
regressions were done with panel data to
capture the eect of changes in variables within
Figure 2. Partial correlation between gender wage gap and GDP growth.
Table 3. Determinants of GDP growth: period averages, 197595
a
Variable Eqn. (1) Eqn. (2) Eqn. (3) Eqn. (4)
Constant 0.011 0.008 0.009 0.016
(4.12)
+
(2.25)
++
(4.19)
+
(8.69)
+
d log K 0.556 0.511 0.540 0.567
(16.60)
+
(12.01)
+
(22.11)
+
(13.39)
+
HK 0.005 0.005 0.006 )0.001
(2.44)
++
(1.99)
+++
(2.56)
++
()0.45)
WGAP1 0.015
(1.95)
+++
WGAP2 0.010
(1.78)
+++
WGAP3 0.010
(1.77)
+++
Adjusted R
2
0.824 0.881 0.875 0.847
F-statistic 30.84
+
47.86
+
45.13
+
36.25
+
N=20
a
Numbers in parentheses are t-statistics.
*
p ` 0X01.
**
p ` 0X05.
***
p ` 0X10.
GENDER INEQUALITY AND ECONOMIC GROWTH 1219
countries over time, using ve-year averages
and a maximum of four observations for each
country. In this way, time-varying, country-
specic eects could be accounted for.
The regressions are estimated using a two-
way error components model. The basic model
can be summarized as:
Y
it
= a X
it
b m
it
Y
where the error term m
it
has three components:
m
it
= l
i
k
t

it
X
Here l
i
captures the country specic-eects
while k
t
represents time-varying eects. The
estimation can be done with a least squares
dummy variable model (LSDV) with dummy
variables used to capture country and time
eects. Country (xed) eects control for
unobserved time-invariant dierences that
might aect growth, such as initial conditions,
technological policies that aect innovation,
and other institutional factors. In cases with
limited degrees of freedom, however, it is
preferable to use the ``within'' estimator. For
this procedure, variables are transformed into
deviations from the time and country mean.
For example, a variable Y is transformed as
follows:
Y
+
it
= Y
it

"
Y
i

"
Y
t

"
Y

Y
where the + denotes the transformed variable,
and dots indicate averages of observations over
t and/or i. For the purposes of this study, the
``within'' estimator is more useful, due to the
small size of the data set. With the ``within''
estimator, the constant term, xed eects, and
time eects can then be recovered from the
regression estimates, but in presenting the
results here, these are omitted from the
discussion, given our primary focus on the role
of gender.
The results obtained from these regressions
are shown in Table 4. Eqn. (1) includes as
explanatory variables the growth rate of the
capital stock and economy-wide human capital,
measured as the growth rate of the educational
attainment of persons 15 and over.
24
Each is
signicant and coecients are positive. Eqn. (2)
disaggregates the human capital variable. The
coecient on the female variable is larger than
that for males and is signicant while the latter
is not, for reasons that are not obvious. Eqn.
(3) includes WGAP1. The coecient on the
wage gap variable in that equation indicates
that a 0.10 increase in the gender wage gap
leads to a 0.60 percentage point increase in the
GDP growth rate.
As an illustration of the strength of the eect
of this variable, the results imply that for 1985
89, 4.0 percentage points of the gap between
Koreas GDP growth (9.2%) and Costa Ricas
(3.9%) can be explained by the gender wage
gap. Human capital variables perform poorly
in this regression insofar as coecients are not
stable, and, in the case of the male variable, the
Table 4. Determinants of growth: ve-year averages, 197595
a
Variable Eqn. (1) Eqn. (2) Eqn. (3) Eqn. (4) Eqn. (5)
d log K 0.675 0.649 0.328 0.521 0.476
(11.45)
+
(11.64)
+
(6.63)
+
(7.59)
+
(8.16)
+
HK 0.017
(2.12)
++
HKF 0.025 0.008 0.002 0.006
(2.42)
++
(1.90)
+++
(2.13)
++
(0.93)
HKM 0.001 )0.007 0.001 )0.001
(0.01) ()3.17)
+
(0.09) ()0.45)
WGAP1 0.060
(10.18)
+
WGAP2 0.104
(3.41)
+
WGAP3 0.051
(5.69)
+
DW 1.903 1.812 1.999 1.920 1.885
a
R
2
s are not reported since this statistic is invalid when equations are estimated without a constant term. N=55.
Numbers in parentheses are t-statistics.
*
p ` 0X01.
**
p ` 0X05.
***
p ` 0X10.
WORLD DEVELOPMENT 1220
sign changes. Interestingly, the size of the
coecient on the capital accumulation variable
also declines with the addition of the gender
wage gap.
Eqn. (4) uses WGAP2 and the coecient on
that variable is positive and signicant, indi-
cating that even after correcting the gender
wage variable for education dierences by sex,
the larger the ``eciency''wage gap, the higher
the rate of growth. The female human capital
variable is positive and signicant, while that
for males is smaller and insignicant. The size
of the coecient on the capital accumulation
variable is again smaller than in Eqns. (1) and
(2).
In Eqn. (5), WGAP3 is used to capture the
eect of gender wage dierences on growth. In
this specication, the wage gap variable is again
positive and signicant. The female education
variable is, however, insignicant along with
the male human capital variable. The size of the
coecient on the capital accumulation variable
is again smaller than in Eqns. (1) and (2),
suggesting the possibility that a portion of the
eect of investment on growth may transmitted
through the eect of gender wage inequality.
We also want to consider whether we are
justied in adopting a model with country-
specic and time eects as compared to a model
in which the coecients are assumed to be the
same for all countries over time. Tests of poo-
lability of data were conducted on these esti-
mates using F-tests which determine whether
using a ``within''estimator to control for xed
and time eects signicantly reduced variance
in the estimated models. For Eqns. (1)(5), the
F-tests rejected the null hypothesis (at the 1%
level) that xed and time eects were not
important and therefore the ``within'' estimator
results are preferred to a pooled model.
Broadly, the two sets of regressions presented
herethe period and ve-year averagespro-
vide fairly robust results as to the positive role
of gender wage dierentials in stimulating
economic growth. This relationship continues
to hold when the gender wage gap data are
corrected for education, and are interacted with
the level of education in the economy.
25
The
latter nding provides some support for the
view that there are complementarities between
exports, education, and structure of produc-
tion.
Gender-disaggregated measures of human
capital performed less robustly in the ve-year
average models, however, and little can be
inferred from these results about the role of
education by gender in inuencing economic
growth, at least for the sample of countries
considered here. While some authors have
found a positive link between education and
growth, those analyses use a broad cross-sec-
tion of countries. The contrasting ndings
presented here may indicate that the role of
education by gender also varies by economic
structure. Further research is needed to more
denitively unravel that relationship.
(c) Investment and gender wage dierentials
It might be argued that part of the macro-
economic eect of gender wage dierentials is
on investment. The decrease in the size of the
coecient on the capital accumulation variable
with the addition of the gender variables in
Eqns. (3)(5) in Table 4 is consistent with that
argument. Taking the male wage as a bench-
mark, wider gender wage dierentials may be a
signal of the protability of investment. This is
because gender wage dierentials may signal
weaker bargaining power on the part of female
workers, leading to low unit labor costs, and an
assumption on the part of employers of the
reduced cost of extracting labor eort from
female workers and limited resistance to poor
working conditions. Further, the protability
of investment may be aected by the fact that
womens relatively low wages generate foreign
exchange to purchase high-tech capital goods.
We test this hypothesis by regressing invest-
ment as a share of GDP on gender wage
dierentials.
26
Following Larran and Vergara
(1998) and others, we also include two variables
that measure macroeconomic stabilitythe
rate of ination and the variance of real GDP
growth. These regressions use averages for
197595. The results are presented in Table 5.
The results of estimating Eqn. (1) indicate
that ination and variance of GDP growth
have negative and signicant eects on invest-
ment as a share of GDP, presumably because of
their contribution to economic uncertainty. The
wage gap (WGAP1) has a positive and signi-
cant eect on the investment share. The coe-
cient (0.138) indicates that a 0.10 increase in the
gender wage gap leads to a 1.38 percentage
point increase in investment as a share of GDP.
Thus the greater income inequality in Singa-
pore relative to Costa Rica during 197595
explains 6.1 percentage points of the dierence
in investment as a share of GDP (38.3% in
Singapore compared to 21.2% in Costa Rica).
The alternative measures of the gender wage
GENDER INEQUALITY AND ECONOMIC GROWTH 1221
gap similarly indicate a positive eect of gender
wage inequality on investment, as shown in
Eqns. (2) and (3). Figures 3 and 4 show the
eect of gender wage inequality on investment
as a share of GDP after netting out the eect of
other independent variables, using WGAP1 and
WGAP2, respectively.
27
These results suggest that the macroeco-
nomic eects of gender inequality are trans-
mitted via numerous pathways. The gender
wage gap is a stimulus to investment, but also
has an inuence on economic growth beyond
the eect on investment (as evidenced by the
regression results in Tables 3 and 4), suggesting
that this variable aects the productivity of
investment. These results are consistent with
the ndings of authors who link gender wage
gaps to investment (Ert urk & Ca!gatay, 1995),
and the feminization of the labor force in
export-oriented economies (cf., Ca!gatay &

Olzer, 1995; Standing, 1999). They also support
the argument that gender inequality that stim-
ulates exports, providing the foreign exchange
to purchase ``upscale'' technologies, contributes
to productivity growth.
The results contrast, however, with recent
empirical work that indicates income inequality
slows economic growth and investment. Those
studies base their argument on the view that
income inequality leads to political conict that
creates a climate of uncertainty and instability,
either overtly or through the eect on macro-
economic policy, thus slowing growth.
The results presented here suggest that just
who experiences the inequality matters.
Inequality born by women appears to have a
positive eect because this condition stimulates
exports and raises prot expectations. These
together stimulate investment and productivity
growth, without apparently generating the
negative political repercussions that would
undermine the gains in measured GDP growth.
Why then so little growth-retarding conict
in response to gender-based inequality? The key
seems to lie in the socialization of women who
are less inclined than men, at least in the sample
of countries used in this study, to protest
income inequality suciently to slow invest-
ment and growth.
28
Following this reasoning,
Figure 3. Partial correlation between gender wage gap and investment.
Table 5. Determinants of investment: period averages,
197595
a
Variable Eqn. (1) Eqn. (2) Eqn. (3)
Constant 0.197 0.249 0.234
(12.46)
+
(19.41)
+
(18.90)
+
WGAP1 0.138
(4.43)
+
WGAP2 0.084
(1.93)
+++
WGAP3 0.072
(3.01)
+
Ination )0.078 )0.068 )0.052
()5.13)
+
()2.76)
++
()2.46)
++
VarGDP )1.057 )3.097 )3.499
()2.05)
++
()3.15)
+
()3.57)
+
Adjusted R
2
0.580 0.195 0.313
F-statistic 9.734
+
2.534
+++
3.888
++
N=20
a
Numbers in parentheses are t-statistics.
*
p ` 0X01.
**
p ` 0X05.
***
p ` 0X10.
WORLD DEVELOPMENT 1222
we might hypothesize that gender wage
inequality is likely to produce more positive
eects on growth in countries, the more patri-
archal the gender system. This is likely to occur
because patriarchies produce institutions that
reinforce internalization of social norms that
favor men, reducing political resistance and
therefore the costliness of gender inequality.
5. SUMMARY AND CONCLUSIONS
This paper investigates whether gendered
outcomes in labor markets and education have
macroeconomic eects and, in particular,
whether gender inequality aects the rate of
economic growth. The link between gender and
growth is bound to dier historically, and in
economies with diering economic structures
and gender systems. The question investigated
here narrowly denes this link along the
trajectory of the eects of discriminatorily low
wages for women on: (a) exports, and therefore
technological change and productivity growth,
and (b) investment. Based on a data set of
middle income semi-industrialized economies
with varying degrees of export orientation, the
ndings reported here indicate that across
countries, and over time within countries, there
is a positive link between gender wage
inequality and growth via both channels. In
particular, the evidence is consistent with the
argument that gender inequality stimulates
investment, but also enhances the productivity
of investment, possibly through the eect that
low wages for women has on exports and
therefore technology imports.
While cross-country regressions can highlight
some useful factors that are statistically corre-
lated with economic growth, a richer under-
standing of the dynamics of growth at the
country level is needed and requires a thorough
investigation of institutional structures.
Nevertheless, these results mark a useful
departure for and are complementary to more
in-depth country analyses, adding support to
the view that gendered outcomes are signicant
not only at the micro level but also at the macro
level.
There are other links between gender and
growth that could usefully be explored in
extensions of this paper. For example, in view
of womens disproportionate performance of
reproductive (unpaid) labor in most economies,
it would be useful to assess the macro impact of
feminization of the paid labor force. This could
have notable negative macro-level eects if
women reduce the amount of time spent
working in the reproductive sector of the
economy or subsistence production. Or,
womens access to paid jobs may increase their
control over family income, inducing positive
eects on family well-being.
Further, we test here only for a very specic
case, but future research could usefully be
directed at understanding how growth and
gender interact in economies with diering
economic structures and gender relations. For
example, it is not clear what the relationship
between gender wage inequality and growth
might be in an industrialized economy, or one
Figure 4. Partial correlation between wage gaps and investment.
GENDER INEQUALITY AND ECONOMIC GROWTH 1223
that is largely agricultural. It would also be
useful to investigate whether gender inequality
constrains growth in countries in which patri-
archy is less rmly rooted, if indeed inequality
does lead to disruptive political conict.
The policy implications of the results
presented here bear on the question of which
development and growth strategies are most
compatible with gender equity. This is indeed
the question at the heart of feminist research on
the interrelationship between gender and
macroeconomics. The export-oriented growth
and industrialization strategy has been promo-
ted by some as a means to improve womens
well-being. Yet evidence presented here suggests
that gender inequality is a casual factor in
investment and economic growth for the semi-
industrialized countries in the sample used here.
Moreover, there is little evidence that gender
inequality has dissipated to any marked degree
even in the most successful of these countries
(Seguino, 1997). We might then question
whether supporting this strategy in its current
form, based as it is on gender inequality, can
successfully lead to a more equitable distribu-
tion of labor and resources by gender over time.
If we doubt that, our work is to dene strate-
gies that make it possible to promote both
economic growth and gender equality.
In particular, future research might consider
alternative macroeconomic strategies and poli-
cies that can raise productivity and material
well-being. Are there means, for example, to
generate eciency wage eects from raising
womens relative wages that oset the negative
eect on exports in SIEO countries? What
alternative approaches might help semi-indus-
trialized economies to overcome foreign
exchange constraints so that they are not so
dependent on cheap labor? Can restrictions on
physical capital mobility make investment that
relies on low-cost female labor less sensitive to
changes in protability? These are national-
level considerations. But international factors
clearly play an inuential role as well,
suggesting that the scope of analysis must also
be enlarged to consider how the global trading
system and its institutions might be trans-
formed to make gender equity more achievable
during the process of growth.
NOTES
1. Marxist and Neo-Kaleckian analyses, for example,
have examined the relationship between class inequality
and growth (cf., Dutt, 1984, 1990; Blecker, 1989;
Bhaduri & Marglin, 1990; Taylor, 1983, 1991). Another
political economy approach has been to relate the degree
of income inequality (measured as the household distri-
bution of income) to the level of political conict, and to
analyze the resulting eects on growth (Larran &
Vergara, 1998; Alesina & Rodrik, 1994; Persson &
Tabellini, 1994).
2. See Ca!gatay (1998) for a review of this literature.
3. See, for example, Barro (1991), Collins and
Bosworth (1996), Harrison (1995), Levine and Renelt
(1992), Mankiw, Romer and Weil (1992), Nehru and
Dhareshwar (1994), Sachs and Warner (1997), and
Young (1995).
4. Nelson and Pack (1998) make this argument in an
indirect way. They view the spectacular growth of East
Asian economies to be the result of assimilation of
technologies adopted from advanced countries.
5. For a survey of the literature on the relationship
between trade and productivity, see Pack (1989).
6. This is also consistent with Yaghmaians (1994)
results that report little evidence of a positive eect of
exports on African growth, a region that specializes in
commodity exports.
7. Also in contrast to these claims, Neo-Kaleckians
have emphasized the relationship between class distri-
bution of income and the rate of capital accumula-
tion, with inequality exerting a positive impact on
investment and thereby growth in prot-led econo-
mies. See, for example, Bhaduri and Marglin (1990)
and further reference to this literature in Section 2(b)
below.
8. See McCrate (1999) for an excellent synopsis of
economists understandings of the intersection of gender,
class, and race.
9. Much of this research was stimulated by the
structural adjustment experience of the 1980s, with
researchers considering the gender eects of adjustment
policies and investigating feed-back eects. See, for
example, Ashfar and Dennis (1991), Benera and
Feldman (1992), Bakker (1994), and Elson (1995).
For a discussion of the theoretical issues, see Walters
(1995).
WORLD DEVELOPMENT 1224
10. Country studies that assess the portion of gender
wage dierentials due to discrimination are too numer-
ous to be exhaustively inventoried here. For some
examples, see Birdsall and Behrman (1991), Behrman
and Zhang (1995), Horton (1996), and Psacharopoulos
and Tzannatos (1992). The latter two studies nd that
the bulk of gender wage dierentials (55% in Asia and
75% in Latin America) are explained by factors other
than human capital dierences.
11. At least two arguments for this claim can be made:
(a) prots are the raison d9 etre of capitalism, and (b) they
enhance the rms ability to internally nance invest-
ment.
12. The basis of the index is a production function
framework where several variables interact to promote
growth.
13. The R
2
for the trend line in Figure 1 is 0.469 and
the t-statistic on the SIEO index coecient is 3.98. Most
of those countries with a threshold SIEO index value
below 1.0 also lacked gender wage data and thus an even
lower threshold would not have not altered the sample
signicantly.
14. This approach is also adopted because it provides a
useful organizational framework and a means to decom-
pose the growth of output into the contributions of a
variety of variables. Nevertheless, it should be recalled
that there have been a number of criticisms of this
approach, particularly in the so-called total factor
productivity debates on the sources of Asian growth
with regard to its ability to dierentiate between the
eects of technical change and capital accumulation
(Nelson & Pack, 1998). Some claim that the growth
accounting methodology underestimates the contribu-
tion of technical change because technology is frequently
embodied in capital equipment. Thus the size of the
coecient on the capital accumulation variable is
generally overestimated. Further, others have noted that
the constant is an inaccurate measure of technical
progress since it also captures the eects of other
variables not controlled for. The approach adopted here
does not fully address these concerns but, rather,
partitions the factors that aect technical progress into
gender wage inequality and other factors. The latter are
either captured by the constant or reected in the time
trend, with the remainder showing up in the error term.
15. Following the practice of a number of studies, we
rely on human capital to measure labor's contribution to
growth (e.g., Collins & Bosworth, 1996). While labor
supply (measured as labor force participation or popu-
lation growth) was not included as an independent
variable in the results presented here, it was included in
separate regressions but was found in most cases to be
insignicant (results available from author on request).
Not including a labor force variable in the regression
results presented here can be justied on two accounts.
First, use of labor force participation rates presents an
endogenity/identication problem, since labor force data
for women tend to move pro-cyclically. This might be
remedied by use of population growth rates but this
measure is also inaccurate insofar as it fails to dieren-
tiate between the proportion of labor spent in paid
versus unpaid labor.
16. Capital stock data that cover a sucient number of
years are dicult to come by. The weakness with the
proxy used for capital stock in this data set is that it does
not account for depreciation. It that way, it overstates
the importance of capital. Many studies use instead
investment as a share of GDP, but that measure suers
from the same mismeasurement problem. The implica-
tions for this study of overstating the growth rate of the
capital stock is that the impact of the gender wage gap,
via the eect on technical change, may be understated.
As a result, the estimated impact of gender wage
dierentials on growth is likely on the conservative side.
17. Lack of hourly wage data for some countries
introduces a degree of measurement error, with womens
hourly wages potentially understated. In other instances,
however, womens wages may be overstated. For exam-
ple, Korean survey data cover only establishments with
ve or more workers. Women are disproportionately
concentrated in unsurveyed establishments where wages
are lower than in large rms and thus data likely
overstate womens earnings relative to mens. In other
cases, data are collected only on urban workers, and the
direction of bias is not known. Insofar as the errors are
random (more likely in the period average estimations),
the coecient estimates on the gender wage gap
variables are underestimated.
18. Several variants on WGAP3 were tried and each
provided similar results. The variations were on the
measure of human capital selected, and included average
years of secondary education for the total population
age 15 and over, and for women. Results are available
on request.
19. Much of these data are from the International
Labour Organization, and details on dierences in
coverage can be found in Yearbook of Labour Statistics
(various years).
20. A good part of recent growth research has been
focused on the convergence debate. For completeness,
GENDER INEQUALITY AND ECONOMIC GROWTH 1225
this model was estimated with initial GDP in 1960, but it
was insignicant in all regressions. Results are available
from the author.
21. The gender wage gap in South Korea is 1.071 and
in Chile is 0.294. The dierence in gender wage gaps
between the two countries (0.777) is multiplied by 0.15 to
obtain the percentage point dierence in country growth
rates attributable to gender wage dierentials.
22. To test for nonlinearities, the regressions were also
run with squared terms of the gender gap. These proved
to be insignicant, however.
23. Using again the example of South Korea and
Chile, the coecient on WGAP2 indicates that roughly
0.8 percentage points of the dierence in GDP growth
rates between the two countries can be attributed to
gender inequality.
24. Alternative measures of human capital were exper-
imented with and yielded similar results. This measure of
human capital performs consistently as gender wage
variables are entered, and that may be because it reduces
the problem of collinearity with education-adjusted
wage gap variables. In any case, the various measure-
ments of human capital tried had little eect on gender
wage variables.
25. Some might also be concerned about the direction
of causality between gender inequality and growth.
While it is not likely that, in an export-oriented economy
with women segregated in the export sector, rapid
growth will widen the wage gap (it should narrow),
Granger-causality tests might be used to explore this
relationship further. To do this, two sets of Granger
causality tests were run on annual data. In one set the
causality between GDP growth and WGAP1 was
assessed using two- and four-period lags, and in the
second case, WGAP2 was used as the gender wage
variable. In both cases, the evidence does not support the
claim that GDP Granger-causes the gender wage gap.
Some support is found for the alternative hypothesis,
that gender wage inequality Granger-causes economic
growth, with the results stronger in the case of WGAP1.
26. Insucient data on private investment as a share of
GDP precluded use of that variable in place of total
investment.
27. The R
2
on the trend line shown in Figure 3 is 0.59
and the t-statistic on WGAP1 is 5.08. For Figure 4, the
R
2
is signicantly lower (0.19) and the t-statistic on
WGAP2 is 2.09.
28. On gender socialization in some Asian economies,
see Greenhalgh (1985), Brinton (1988), Lee (1993), and
Hsiung (1996). These studies emphasize the ways that
women are socialized to accept a hierarchial male-
dominated social order, and note the role the state has
played in perpetuating a patriarchal social formation.
The authors do not suggest that women have remained
passive, just that they are more so than men, given their
socialization. It should be noted that in recent years,
women in a number of Asian economies have shown
increased willingness to the protest harsh work condi-
tions, underscoring the fact that gender identities are not
static.
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(For Appendix see opposite)
WORLD DEVELOPMENT 1228
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3
0
.
5
5
3
1
.
1
2
1
0
.
1
6
6
)
0
.
6
2
3
)
2
.
1
7
0
1
9
.
4
4
2
.
6
a
W
G
A
P
1
i
s
L
o
g
(
W
M
)

L
o
g
(
W
F
)
.
b
W
G
A
P
2
i
s
L
o
g
(
W
M
a
S
Y
R
M
1
5
)

L
o
g
(
W
F
a
S
Y
R
F
1
5
)
w
h
e
r
e
S
Y
R
M
1
5
a
n
d
S
Y
R
F
1
5
a
r
e
a
v
e
r
a
g
e
y
e
a
r
s
s
e
c
o
n
d
a
r
y
e
d
u
c
a
t
i
o
n
p
e
r
m
a
l
e
a
n
d
f
e
m
a
l
e
1
5
y
e
a
r
s
a
n
d
o
l
d
e
r
,
r
e
s
p
e
c
t
i
v
e
l
y
.
c
W
G
A
P
3
i
s
(
W
G
A
P
2
*
T
Y
R
1
5
)
w
h
e
r
e
T
Y
R
1
5
i
s
a
v
e
r
a
g
e
y
e
a
r
s
o
f
e
d
u
c
a
t
i
o
n
f
o
r
t
o
t
a
l
p
o
p
u
l
a
t
i
o
n
o
v
e
r
1
5
.
A
P
P
E
N
D
I
X
A
GENDER INEQUALITY AND ECONOMIC GROWTH 1229
Table 7. Data sources
Female and male manufacturing earnings See Table 2 for sources
GDP in 1985 prices World Bank World Development Indicators 1997
CD-ROM
Ination World Bank World Development Indicators 1997
CD-ROM.
Investment share of GDP (%) Penn World Tables, 5.6
Labor force growth, total, female and male (annual %) World Bank World Development Indicators 1997
CD-ROM.
Macro data for Taiwan DGBAS (1997) National Income in Taiwan Area
of the Republic of China
Merchandise exports, constant 1985 $US World Bank World Development Indicators 1997
CD-ROM
Percentage of primary, secondary, and high school
completed in the female, male and total population, age
15 and over
Barro and Lee (1996)
Population data (male, female, total and over 15) Penn World Tables, 5.6, and for Taiwan, DGBAS
(various years), Statistical Yearbook of Republic of
China
Real GDP per capita in constant dollars, chain index,
expressed in international prices, base 1985
Penn World Tables, 5.6
WORLD DEVELOPMENT 1230