impact of gender inequality on economic …...impact of gender inequality on economic development...

Impact of gender inequality on economic development

January 29, 2016

Stephan KlasenUniversity of Göttingen

SNIS Inequality Conference, Zürich

Introduction

• At decolonization: very large gender gaps in many parts of thedeveloping world (and not only there):– In education, labor force participation, pay, and political empowerment;

– Big regional variation: gaps particularly large in South Asia, Middle East, and (some) in Sub-Saharan Africa;

• Clear equity issue, but is it also an efficiency issue? – Substantial evidence on link between gender gaps and growth, but is it

causal?

2

3

Source: Klasen and Lamanna (2009).

Schooling Levels and Gaps by Region (adults 25+)

Source: ILO (2011) 4

0,1

0,2

0,3

0,4

0,5

0,6

0,7

0,8

19

90

19

91

19

92

19

93

19

94

19

95

19

96

19

97

19

98

19

99

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

Female Labor Force Participation (25-59)

OECD

EAP

ECA

LAC

MENA

Sasia

SSA

0,82

0,84

0,86

0,88

0,9

0,92

0,94

0,96

1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010

Male Labor Force Participation (25-59)

OECD

EAP

ECA

LAC

MENA

Sasia

SSA

Gender gaps in education/labor force participation

• Theoretical mechanisms:– Optimal sexual division of labor generates static efficiency gains (Becker);

– Underpaying women a competitive advantage (Seguino);

– Men and women imperfect substitutes in production (e.g. Knowles et al. 2002): gender gaps reduce growth;

– Selection/distortion mechanism (e.g. Dollar and Gatti, 1999; Teignier, andCuberes, 2015; Esteve-Volart, 2004): distortionary tax on talent;

– Demographic effects (Galor and Weil, 2000; Lagerlöf 2003):

• employment/population effect (Young 1995);

• rising education/employment raises opportunity cost of women‘s time: lowerfertility, induced quantity-quality trade-off;

5

Mechanisms (continued)

• Gendered preference effect (e.g. Thomas, 1990; 1997; Lundberg, Pollak and Wales, 1997): – In Households: Women invest more in children (health and

education); (but Tertilt and Doepcke, 2014);

– In Politics: Women leaders invest more in public infrastructure, education, public health (Chattopaddhya and Duflo, 2004; Beaman et al. 2006);

• Why persistent? Usually an externality/coordination issue;

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Empirical Evidence

• Educational gender gaps:– Many studies, all pointing to lower gender gaps leading to higher

growth (except Barro-Lee papers);

– Cross-country, fixed-effect panel, within-country panel, within-regionpanels, IV approaches, etc. all yield similar qualitative results;

– Result more robust than education-growth linkage;

– Mechanisms: considerable evidence for demographic effects, someevidence for selection/distortion and/or imperfect substitutability;

7

Source: Klasen and Lamana (2009) 8

Evaluation April 15, 2011 9

Evaluation April 15, 2011 10

Empirical Evidence (continued)

• Employment gender gaps:– Few studies, data rather poor;

– Endogeneity issues harder to tackle;

– Evidence suggests that gender gaps also reduce economic growth;

• Women as policy-makers;

• Pay gaps:– Seguino controversy;

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Source:Seguino (2000) 14

Source: Schober and Winter-Ebmer (2011) 15

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Copenhagen Consensus Project

• How to spend $75 billion to improve the world;

• 10 policy areas where interventions were to beproposed (ranging from nutrition, education, climatechange, terrorism, trade, to gender), then ranked bydistinguished expert panel in may 2008*.

• Common methodology of assessing policy options: cost-benefit analysis– Income benefits

– Health (longevity benefits), translated into income benefits

– 100 year horizon, common discount rate

• Many Problems and limitations of approach!*Nobel prize winners Schelling, Kydland, North, Mundell, Smith plus Baghwati, Bourguignon, Stokey, and Lomborg

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Proposed Policy Interventions

• Framework:– Equal rights, equal economic opportunities, equal

voice central to policy options; overall aim tostrengthen female agency;

– Existing inequalities closely related;

– Focus on strengthening agency in areas where femalesare disadvantaged:

• Education

• Reproductive Health

• Access to economic resources

• Political representation

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Selecting Policy Options• Criteria

– promote female well-being and empowerment;– address inequalities in areas outlined above;– promote overall economic development;– in principle, politically feasible;– evidence exists on effectiveness (and, to the extent possible, cost-

effectiveness) of these interventions (preferably in setting required by CCC);

• Caveats– More investment funds not always only or best solution to problem

(incentives, governance, quality issues);– Cost and benefit estimates usually context-specific;– Have to make vast generalizations and very rough assumptions;– Some interventions are costly in political but not financial terms.

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Option 1: Increase Girl‘s Schooling

• Proposal: Conditional cash transfer program given to mothers provided girls attend school (3rd to 9th grade)

• Model: Mexico‘s Progresa/Oportunidades Program applied to South Asia and Sub-Saharan Africa;

• Benefits: Higher female education leading to:– Higher growth;

– Lower child mortality;

– Lower fertility (and more investment in each child);

– Better education of next generation;

– Mortality benefit for families where transfer is ‚windfall‘

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Table 6: Option 1--Estimates of Benefits and Benefit-Cost Ratios for Conditional Cash Transfer (CCT) Program to Promote Female Education per $billion spent

Low Discount Rate High Discount Rate

DALY

(low value) DALY

(high value) DALY

(low value) DALY

(high value)

Assuming CCT Program will achieve 1 more year of female schooling ('000 $)

Income Benefit 5786163 5786163 2936553 2936553

Mortality Benefit 3483236 17416182 1609963 8049814

Total Benefit 9269399 23202345 4546516 10986367

Benefit/Cost Ratio 9.27 23.20 4.55 10.99

Assuming CCT Program will achieve 0.7 more years of schooling ('000$)

Income Benefit 4050314 4050314 2055587 2055587


Total Benefit 6488579 16241641 3182561 7690457


Assuming 1 more year of schooling, additional supply costs and direct mortality benefit of cash transfer

Income Benefit 4959568 4959568 2517045 2517045


Total Benefit 7951638 19919916 3902950 10446571


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Option 2: Safe Motherhood

• Proposal: Three components scaled up to reach all of South Asia and Sub Saharan Africa– Family planning programs (to address remaining unmet need)

– Support for safe births

– Emergency maternity services

• Policy option costed by disease priorities project on basis ofnumerous medical studies

• Benefits– Fewer unplanned births and abortions, especially among teen women

– Fewer infant deaths

– Fewer pregnancy and birth-related deaths

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Table 9: Option 3: Assumptions used for estimating benefit-cost ratios

South Asia

Benefits

DALYs lost due to unwanted fertility and unsafe abortions in year 0 (Levine et al. 2006, Table 57.2)

1,669,727

Number of women with an unmet need for contraception (Levine et al. 2006)

89,375,000

Number of years to eliminate unwanted fertility and unsafe abortions*

14

Number of DALYs gained per million population** from maternal health programs

(Graham et al. 2006):

Routine maternity care 3,273

Increased primary-level coverage 4,582

Improved overall quality of care and coverage with nutritional 9,354

supplements

Costs

Average cost of family planning program per DALY gained (2001 U.S. dollars) (Levine et al. 2006) 30

Cost of maternal health programs per DALY saved per million population (million U.S. dollars)

(Graham et al. 2006):

Routine maternity care 25

Increased primary-level coverage 148

Improved overall quality of care and coverage with nutritional 144

supplements

* This is based on a total percent decline in the fertility rate in developing countries over the past 50 years of 53% (from 6 to 2.8 children per woman), implying an annual decline in the fertility rate of roughly 1.07%. Taking the fertility rates in South Asia and sub-Saharan Africa of 3.3 and 5.2 respectively, if these rates were to decline annually by 1.07%, it would take around 14 years to do so in South Asia and 43 years in sub-Saharan Africa.

** Total population in 2001 (millions) for South Asia and sub-Saharan Africa respectively are

1,375 and 685 (WDI Indicators).

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Table 10: Option 3: Estimates of benefits and costs for support for women's reproductive role

(million US$)

Low discount rate High discount rate

DALY (Low

value)

DALY (High value)

DALY (Low

value)

DALY (High value)

Benefits from family planning 38,982 194,911 30,802 154,010

Benefits from maternal care

Routine maternity care 174,595 872,973 124,173 620,866

Increased primary-level coverage 244,436 1,222,180 173,844 869,220

Improved overall quality of care* and coverage 511,764 2,558,819 363,223 1,816,114 Total Benefits from maternal care & family planning

Routine maternity care 213,577 1,067,884 154,975 774,875

Increased primary-level coverage 283,418 1,417,091 204,646 1,023,230

Improved overall quality of care* and coverage 550,746 2,753,730 394,025 1,970,124

Cost of family planning program 956 956 717 717

Cost of maternal care


Increased primary-level coverage 26,826 26,826 19,626 19,626

Improved overall quality of care* and coverage 49,592 49,592 35,909 35,909

Total Costs from maternal care & family planning


Increased primary-level coverage 27,782 27,782 20,343 20,343

Improved overall quality of care* and coverage 50,547 50,547 36,626 36,626

Benefit/cost ratio

Routine maternity care 11.75 58.73 11.71 58.54

Increased primary-level coverage 10.20 51.01 10.06 50.30

Improved overall quality of care* and coverage 10.90 54.48 10.76 53.79

* Improved overall quality of maternal care includes nutritional supplementation.

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Option 3: Microfinance for Women

• Proposal: Extend microcredit for women• Model: Grameen Bank • Benefits of microfinance

– Greater bargaining power (with positive effects forhousehold spending and women‘s and child health)

– Increases female labor force participation andentrpreneurial activities

– More cost-effective than loans to males (differences in loan use and repayments)

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Table 7: Option 2: Assumptions used for estimating benefit-cost ratios

Annual growth in number of new poor women borrowers (Khandker et al. 1995, Table 3.4) 35%

Number of new borrowers in initial year of program (Khandker et al. 1995, Table 3.4) 348,000

Average loan per new borrower (Cull, Demirgûç-Kunt and Morduch 2007) 285

Benefits

First year return to credit for household (increase in consumption) (Khandker 2005) 9.45%

Average annual increase in household expenditure from old loans (Khandker 2005) 0.98%

Number of years borrower accrues increased expenditure from old loans in lifetime 30

Elasticity of intergenerational transmission of income and health 0.50%

Number of generations whose expenditures increase due to old credit (not including self) 2

Number of generations of children whose health is improved (including own children) 4

Increase in DALYs, Lower Bound:

Increase in DALYs per $ loaned to women (first year of loan) (Duflo 2000) 0.000030

Increase in DALYs per $ loaned to women (2nd & 3rd years after loan) (Duflo 2000) 0.000003

Increase in DALYs, Upper Bound (Pitt et al. 2003) 0.000686

Costs

Cost for Grameen Bank (1991/92) (Khandker 1998) 0.172

Cost for BRAC (1991/92) (Khandker 1998) 0.444

Weighted average of above two costs based on loans disbursed (Khandker 1998) 0.204

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Table 8: Option 2: Estimates of benefits and costs for microfinance (million $US)


DALY

(Low value) (High value) (Low value) (High value)

Assuming the lower bound increase in DALY's from microcredit

Income benefit 1,296 1,296 862 862

Mortality benefit 165 825 136 680

Total benefits 1,461 2,121 998 1,543

Total Costs

Constant average costs scenario 922 922 767 767

Constant high costs scenario 2,007 2,007 1,669 1,669

Constant low costs scenario 778 778 647 647

Declining costs scenario 817 817 682 682

Benefit/cost ratio

Constant average costs scenario 1.59 2.30 1.30 2.01

Constant high costs scenario 0.73 1.06 0.60 0.92

Constant low costs scenario 1.88 2.73 1.54 2.39

Declining costs scenario 1.79 2.59 1.46 2.26

Assuming the upper bound increase in DALY's from microcredit

Income benefit 1,296 1,296 862 862

Mortality benefit 3,105 15,526 2,579 12,896

Total benefits 4,401 16,822 3,441 13,758

Total Costs

Constant average costs scenario 922 922 767 767

Constant high costs scenario 2,007 2,007 1,669 1,669

Constant low costs scenario 778 778 647 647

Declining costs scenario 817 817 682 682

Benefit/cost ratio

Constant average costs scenario 4.78 18.25 4.49 17.95




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Option 4: Affirmative Action• Proposal: Quotas for political representation;

• Model: India‘s reservation system at the local level, scaled upto all of the developing world;

• Three components:– Political reservation at subnational levels;

– Advocacy campaign to support program;

– Leadership and management training for female leaders and electedofficials;

– (model: India‘s reservations in Gram Panchayats)

• Benefits:– More investments in water supply, public health, and immunization

– Less corruption in delivery of public services

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Table 13. Option 4: Assumptions used for estimates of benefit-cost ratios

% share of women politicians (based on mean % share in parliament, 2005) 12.83

% annual growth in share of women politicians

High scenario: 20 years to reach 30% share, 30 years to reach 50% 0.045

Low scenario: 30 years to reach 30% share, 45 years to reach 50% 0.03

Benefits

Immunization rates, 2005 (mean; but used population-weighted, region-specific rates) 69.32

Total DALYs gained per % increase in immunization (DCPP, 2006) 10485395

Estimated impact of political reservation on immunization rates (Beaman et al. 2006) 1.8-2.2%

% population with access to safe water supply, 2004 81.8 DALYs gained per 1% increase in safe water supply (Cairncross & Valdmanis 2006)

Low scenario 43,993

High scenario 51,358

Estimated impact of political reservation on water supply (Beaman et al. 2006) 0.191 (s.e. = 0.098)

Average primary school completion rate (World Bank 2007 ), range of 58-98% 84%

Wage premia for completed primary education (Pritchett ), 1.97-2.44 2%

Costs Adult population in less developed countries (000’s), 15-64 (2005) (http://esa.un.org/unpp/index.asp) 3369202

% population, ages 25-59 40%

% population female 49%

% population rural (mean; but used region-specific rate) (http://esa.un.org/unpp/index.asp) 57.1

Average % women who are official leaders in organizations (e.g., community development) (Afrobarometer data, 2005)

2.62%-5.6%

Average (per person) annual cost of public information campaign, $US 2007

Low (for high-density or urban populations) 1

High (for low-density or rural populations) 1.5

Average annual cost per trainee in management/leadership course, 2007 US$

Same as basic education expenditure 27

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Table 14. Option 4: Estimates of benefits and costs for political affirmative action


DALY (Low value)

DALY (High value)

DALY (Low value)

DALY (High value)

Assuming women's share in local government takes 20 years to reach 30% and 30 years to reach 50%

Income benefit 13092042 13092042 7157200 7157200


Total benefits 92120777 490915734 48315005 256105276

Total costs

Low cost scenario 27686210 27686210 19095849 19095849

High cost scenario 34908690 34908690 21226741 21226741

Benefit/cost ratio

Low cost scenario 3.33 17.73 2.53 13.41

High cost scenario 2.64 14.06 2.28 12.07

Assuming women's share in local government takes 30 years to reach 30% and 45 years to reach 50%

Income benefit 13092042 13092042 7157200 7157200


Total benefits 68498884 332660832 36107882 174179526

Total costs

Low cost scenario 27686210 27686210 19095849 19095849

High cost scenario 34908690 34908690 21226741 21226741

Benefit/cost ratio

Low cost scenario 2.47 12.02 1.89 9.12

High cost scenario 1.96 9.53 1.70 8.21

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Table 1. Summary of benefit-cost ratios for four options and selected scenarios


Option Alternative scenarios DALY (Low value)

DALY (High value)

DALY (Low value)

DALY (High value)

1a High return scenario 9.27 23.20 4.55 10.99

1b Low return scenario 6.49 16.24 3.18 7.69

1c High return-high cost scenario 7.95 19.92 3.90 10.45

2a FP + Routine maternity care 11.75 58.73 11.71 58.54

2b FP + Increased primary-level coverage 10.20 51.01 10.06 50.30

2c

FP + Improved overall quality of care & coverage + nutritional supplements 10.90 54.48 10.76 53.79

3a Constant average costs scenario 1.59 2.30 1.30 2.01




3b Constant average costs scenario 4.78 18.25 4.49 17.95




4a Low cost scenario 3.33 17.73 2.53 13.41 High cost scenario 2.64 14.06 2.28 12.07

4b Low cost scenario 2.47 12.02 1.89 9.12 High cost scenario 1.96 9.53 1.70 8.21

Source. King, Klasen, and Porter (2008).

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Conclusions Copenhagen Consensus• Investments in gender equity improves female well-being and

overall economic development;• Some investments yield very high benefit-cost issues;

challenge is to find those that open up more opportunities;• Policy options are, in principle, feasible and have been

rigorously evaluated;• Synergies between options likely;• Quantitative details have to be treated with caution;• Many complex design and implementation issues;• In some cases, investment funds less important than political

will, proper incentives, and leadership.

impact of gender inequality on economic …...impact of gender inequality on economic development...

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