As usual on Fridays, based on Raj Nallari and Breda Griffith's lecture notes.
Gender and Macroeconomics
Gender disparities are far from static and often change quite rapidly in response to changing socioeconomic conditions. Public policy that promotes gender equality can play an active role in bringing about successful growth and development. Moreover, other aspects of an individual’s economic decision-making that is gender specific and/or that responds to public policy may also lead to different outcomes for macroeconomic aggregates. As noted by Stotsky (2006), public policies may enhance women’s employment possibilities with implications for taxation policy, social insurance, spending and other regulatory policies and structural reforms. The improvement and reduction of gender inequalities summarized in Goal 3 of the Millennium Development Goals seeks to “promote gender equality and empower women”. Moreover, gender equality lies behind two further goals in seeking equality in primary and secondary education with full enrollment of girls in primary education and improvements in maternal health. Failing to acknowledge gender issues in macroeconomic policies can lead to unintended consequences as the experience with the structural adjustment policies attests.
A significant literature has emerged on gender and structural adjustment in the wake of the structural adjustment and macroeconomic stabilization policies put in place in developing countries that faced severe balance of payments difficulties in the 1980s. Benería (1995) categorizes this literature into (i) empirical studies that focused on the unequal distribution of the burden between men and women and; (ii) challenges to the gender neutrality implicit in the theoretical and policy models. The structural adjustment and macroeconomic stabilization policies suggested that countries caught in a debt spiral with severe balance of payment problems follow a course of cut-backs in, for example; price subsidies, public investments on infrastructure, and social expenditures on education, health, and public services. Moreover, the policies suggested that trade and capital accounts be liberalized and public enterprises privatized. The outcome from the proposed shifts in resource allocation and increased productivity had adverse welfare effects that were felt most especially by women. As noted by Ça?atay (1998):
(i) it was found that under structural adjustment policies as a result of worsening income distribution and the reorientation of the economy towards exports, women increased their participation in the labor force, in order to maintain themselves and their families. They were often incorporated into informal employment under insecure and worsening conditions of work;
(ii) they tended to increase their unpaid domestic labor in the face of falling incomes.” (p. 8)
Thus, the empirical studies suggested that the “gender dimensions of the costs of adjustment range from the intensification of women’s domestic and market work to the interruption of children’s education (girls’ in particular) to increases in time inputs either to obtain basic services or self-provision them. These are in addition to other costs – much less tangible and more difficult to measure – such as stress and domestic violence” (Benería, 1995; p. 1845). Elson (1992) argues that the structural adjustment and macroeconomic stabilization policies assumed an elastic endurance of those affected and an ability to deal with whatever came their way. The empirical studies showed that women had to make the sacrifices.
In particular, feminist economists challenged the gender neutral assumption in the theoretical and policy models underlying the structural adjustment and macroeconomic stabilization policies. In other words, the macroeconomic modeling of restructuring did not include gender as an analytical category. This is most readily seen in the fact that the models did not take into account women’s unpaid reproductive labor. Yet, the empirical studies showed that many activities, such as healthcare, that were in the public domain came back to the household and to women in particular, especially in poor households as a result of restructuring. The failure of the models to incorporate the empirical findings is an oversight in the context of restructuring and leads to socially inefficient outcomes (Eliot). Ça?atay (1995) also argues that ignoring gender in macroeconomic models ‘makes it more difficult to recognize that the welfare of the next generation may be jeopardized and the development of human resources held back’ (p. 1829). Finally, although some progress has been made in adjusting national income statistics for gender, much information remains lost and thus assessing the welfare implications of macroeconomic models that use traditional indicators such as GDP is misleading.
To conclude, the literature review on gender and macroeconomics would suggest that gender inequalities at the household and microeconomic level have macroeconomic implications and that macroeconomic policies can be gender-biased in their effects.