Does gender inequality matter economically? The answer may be much more than many people think. Without doubt, gender inequality is in itself an important development goal.
The key to fostering gender equality in the economy is to increase involvement of women in the labor market and in positions of responsibility and power. Women represent 40 percent of the global labor force but their labor force participation has hovered around 50 percent over the past two decades.
In Rwanda, the overall labor force participation rate for women accounts to 45.1 percent compared to 62.8 percent for male (LFS 2019).
According to McKinsey Global Institute, potential losses in GDP per capita attributed to gender gaps in the labor market is estimated at 15 percent globally and cost the sub-Saharan Africa region some 6 percent of GDP annually between 2010 and 2014 (UNDP 2016).
Raising the female labor force participation rate to the level for males would boost GDP by 11 percent in sub-Saharan Africa.
Labor force participation rebounds as a result of better education, lower fertility, access to labor saving household technology and availability of market based household services. Given the women`s higher rate of post-secondary education in Rwanda and in the region, higher participation of females in the labor force would mean a more skilled overall workforce.
Evidence shows that women are more likely than men to invest a large proportion of their household income to education and health of their children and hence reducing child mortality, lower fertility rates and create a positive effect on growth and development due to higher expenditure on school enrolment and health services.
Over the past decades, the gender gap in education has been steadily shrinking in Rwanda and across the regions at all levels of education. Nevertheless, women still trail men when it comes to literacy. In Rwanda, 69 percent of the female population aged 15 years and above are able to read and write in at least one language as compared to 77.5 percent of males (EICV 5).
Globally and in Rwanda health indicators have also improved, however adolescent fertility has been increasing in Rwanda and across the region. When the rate of adolescent fertility declines, opportunities for girls open up because early motherhood is often associated with higher school dropout rates, and limited employment opportunities later on.
In Rwanda, over the last 10 years, teenage pregnancy and motherhood has been on the increase and is undermining national development efforts. 7.3% of young women between age 15 and 19 have already begun childbearing (DHS 2014-15).
Unemployment rate in Rwanda is higher among women at 17 percent than among men at 13.8 percent (LFS 2019). In additional, the proportion of women in managerial positions is still lower at 32 percent as compared to 68 percent of male.
More access to financial services for women enhances income generating ability and increases their power within the household, more able to save and invest in socioeconomic activities like education and businesses that would boost the economy.
Over the past decade, access to financial services for women has been improving in the region but it remains fragmented across gender lines.
In Rwanda both savings and borrowing services are still more accessible to men than women and today 62 percent of females have transactional accounts (Bank and Mobile Money account) compared to 71 percent of male (Finscope Report 2020).
How does economic growth impact Gender equality?
As countries technological advance, efficiency production of household goods and services increases, thereby diminishing the gender gap in labor force participation. Medical advances such as birth control and the reduction in postpartum disabilities also help to increase women's participation in the labor market.
As countries develop, women enjoy more rights and the service sector occupations expands, hence leading to women`s employment to increase faster than men`s as women are found to have a comparative advantage in intellectual activities, while men have the edge in physical tasks.
Similarly, gender wage gaps directly contribute to income inequality due to the fact that it causes underinvestment in physical and human capital. More so, the higher number of women working in the informal sector in which earnings are lower widens the gender earnings gap and exacerbates income inequality.
Further, large gender gaps in labor force and economic participation restrict the pool of talent in the labor market and thus yield a less efficient allocation of resources and total factors of productivity losses and lower GDP growth.
How can women empowerment diversify the Economy?
Diversification involves shifting resources from sectors with high volatility to less volatile sectors to enhance greater stability. Countries with more diversified production structures tend to have less volatile output, consumption and investment.
Gender inequality in opportunity and labor market participation decreases the variety of goods countries produce and export.
For instance gender gaps in opportunity such as lower educational enrollment rates for girls than boys, harm diversification by constraining the potential pool of human capital available in an economy hence slowing technology adoption and innovation.
Secondly, gender gaps in the labor market impede the development of new ideas by decreasing the efficiency of the labor force. This shrinks the talent pool from which employers can choose and limits the number of female entrepreneurs and hence impeding country`s ability to diversify.
Equally, high levels of gender inequality are associated with lower levels of export diversification leading to lower economic diversification.
Gender gaps in labor force participation prevent a fraction of women from supplying labor to the market hence decreasing income per capita. Suboptimal allocation of managerial talent explicitly leads to lower female human capital accumulation and thus slower technology adoption and innovation hence reducing aggregate output and obstructs economic growth.
To enhance growth and productivity outcomes, Governments and other actors should put in place-integrated set of policies and programs that promote gender equality.
These may include among others the paid maternity leave and child support, equalizing access to education, enforcing gender neutral legal framework for business, reducing administrative burdens on firms and fewer excessive regulatory restrictions, equal access to financing for female and male entrepreneurs, financing programs paired with support measures such as financial literacy training, mentoring, coaching and consulting services as well as increasing access to support networks, including professional advice on legal and financial matters.
There is also a need to reform and improve fiscal policies including gender responsive budgeting, labor income taxation as well as increasing government spending on social welfare.
Fundamentally, there is a need to increase involvement of women in the labor market and in positions of responsibility and power in public and private sectors coupled with greater sharing of joint family and household responsibilities among men and women. Research suggests that well-designed, comprehensive policies can effectively boost women`s economic opportunities as well as their economic participation.
The author is a Gender Policy Analyst