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The Impact of Gender Inequality in Education and Employment on Economic Growth: New Evidence for a Panel of Countries

Stephan Klasen $ Francesca Lamanna 2009

Presented by Rajius Idzalika Chair of Development Economics Georg-August niversitt Gttingen

Summary Introduction Theory and Evidence Data and Estimation Results Conclusions

Objective To scrutiny the impact of gender gaps in education and employment on the economic performance. Findings 1. Using panel data across the countries, gender gaps in education and employment lead to slower economic growth. 2. The combined `costs` of education and employment gaps in the Middle East and North Africa (MENA), South Asia are 0.9-1.7 and 0.1-1.6 consecutively percentage point differences in growth compared to East Asia. Gender gaps in employment contributes to escalate the difference on economic growth among regions, with MENA and South Asia suffering most from slower growth due to gender inequality in employment.


Why gender inequalities matter? Previous works suggest that the effect of gender gap in education on economic growth is negative, based on data set until 1990. With data up to 2000 is available, the work is subject to update. The impact of gender gap in employment on economic growth is less studied. Methodological issues: endogeneity, unobserved heterogeneity, poor data availability and quality.

Theory and Evidence

Findings from Klasen (2002) The higher gender gaps in education in sub-Saharan Africa, compared to East Asia, and their slower reduction, accounted for 0.6 percentage points in the 3.5 percentage points difference in the growth rates in the two regions in the period 196092. Estimation for MENA is about 0.9 percentage points of the 1.8 percentage points. Findings from Klasen & Lamanna (2003) The growth would be higher if the gender gap in labour market participation were reduced (through more women entering the market).

Theory and Evidence

Theoritical point of view in education:

Gender inequalities reduces the overall average of human capital thus hurt the economic performance -> excluding highly qualified girls and at the same time take less qualified boys to enjoy education. Positive externalities on economic growth of female education -> reduce fertility, child mortality, promote education. Increase the international competitiveness through women capitalization -> women needs education an no obstacle to enter the job market.

Theory and Evidence

Theoritical point of view in employment:

Female restriction in the job market excludes high qualified women -> reduce the average ability of the workforce. Lower economic growth due to higher fertility rate. If women labor force is a competitive advantage in a country, gender gap in pay on national competitiveness would reduce economic growth. Gender gap reduce the bergaining power of women at home -> more bargaining power due to higher earning will promote the next generation human capital.

Theory and Evidence

theoritical framework support for the notion that gender gap in education and employment are likely to reduce the economic performance. empirical evidence supports that gender gap in education reduce economic growth while less evidence exists for the same direction in employment.

Data and Estimation

40 years data 1960 2000 Focus of the study: MENA, sub-Saharan Africa and South Asia Problem: Data quality and comparability
In general:

The fastest growing region is East Asia and Pacific (EAP). For non economic indicators of well-being, EAP is again the most improved EAP and MENA have the fastest improvement in years of education. The worst gender gap in education is in South Asia.

Data and Estimation

Methods proposed:

Cross-country Panel growth regression

Panel data analysis is used to control for endogeneity and unobserved heterogeneity. Expectation: to produce more robust estimates.

Using the updated dataset, to what extent gender bias in education can explain growth differences between the regions?

MENA decreased the losses in annual per capita growth per year from 0.9 percentage points to 0.7 South Asia got the losses slightly larger from 0.9 to 1%. 60% of the growth difference for the three focused regions is explained by the direct effect of gender inequality in education The indirect effect of gender gap in education through demography becomes more important

The impact of gender gap in education on economic growth stays
strong, except for sub-Saharan Africa (SSA). In SSA, reducing gender gap only cannot help the poor growth performance. Gender gaps in labor force:

In general, it has a negative impact on economic growth. Low female labor force in MENA that actually prevent the higher

growth. In South Asia besides persistent gender gaps in education, low female participation rate also accounted for the growth difference.

Any discrimination toward women in education and employment is
costly not only for women but also for the entire society.

Problem in South Asia: permanent gender gaps in education and

economic participation.

Problem in MENA: gender gaps reduction in education is not followed

by reduction in employment.

To increase the womens education level and participation in the labor

force, the realistic approach is to intensify the growth strategies that makes particular use of women.

Klasen, S. (2002), Low Schooling for Girls? Slower Growth for All?, World Bank Economic Review, 16: 34573. Klasen, S. and F. Lamanna (2003), The Impact of Gender Equality in Education and Employment in the Middle East and North Africa, background paper for report on Gender and Development in Middle East and North Africa, Washington, DC: World Klasen, S. and F. Lamanna (2009), The Impact of Gender Equality in Education and Employment on Economic Growth: New Evidence for Panel Data, Feminist Economics, 15:3, 91-132, DOI: 10.1080/13545700902893106

Theory and Evidence

Different time horizons: Gender discrimination in pay on economic performance

reduces economic growth via demographic effects and participation gap -> long term perspective, supply constraint increase economic growth through cheap labor wages for women -> short term perspective, demand side

Theory and Evidence

Education and employment are closely related. However, they measure different things so it is necessary to study them separately. in some regions, when education gap is removed the employment gap still persists they produce different externalities and effects

Large body of empirical evidence suggest that the gender gap in

education reduce economic growth However, little evidence is available about the impact of gender gap in employment and pay on economic growth