From Raj Nallari and Breda Griffith's lecture notes.
Theoretical considerations of gender inequality and economic growth
The simultaneous relationship between gender and growth is also considered in the theoretical literature, in particular from the neoclassical approach and from the feminist literature. Forsythe, Korzeniewicz and Durrant (2000) classify three economic growth perspectives based on the impact of economic growth on inequalities between men and women. To this, we would also add endogenous growth theory that is capable of including gender disparities.
Growth Perspectives and Gender Inequalities – a summary
* from (Stotsky 2006); p. 18. Source: Compiled from Forsythe, Korzeniewicz and Durrant (2000)
The modernization-neoclassical approach has its roots in neoclassical theory that relates economic growth to capital accumulation and savings. The rate of capital accumulation and savings depends on the distribution of resources, income and capabilities. As we have seen in previous postings, the microeconomic evidence for this is gender-dependent At an aggregate level, we can expect that gender inequalities will have an effect on economic growth. As noted by Stotsky (2006) ‘the neoclassical approach examines the simultaneous interaction of economic development and the reduction of gender inequalities. It sees the process of economic development leading to the reduction of these inequalities and also inequalities hindering economic development’. (p. 18).
The modernization-neoclassical approach suggests that gender inequalities resulting from disparities in human capital are likely to wither away over time. For example, gender based differences in employment, wages and/or vulnerability to poverty stem from gender-based differences in education, skills, and, expected length of labor-force participation (Forsythe, Korzeniewicz and Durrant, 2000). Continuing with this theme, the referenced authors note that the modernization-neoclassical growth theory allows for discrimination in labor markets and in social capital but argues that the expansion of markets will undermine the inequalities owing to discrimination, at least in the long run. Social mores and norms may change in the long-run affecting gender inequalities. Indeed sustainable social norms that are discriminatory will work against economic modernization/growth to maintain these discriminatory norms and gender inequalities.
An alternative but consistent view is advanced by Boserup and the Women in Development (WID) approach. Boserup (1970) argues that economic growth in the initial stages of development is characterized by a widening gap between men and women represented by a curvilinear relationship between economic growth and the status of women. Boserup argues that productivity differences between men and women at low levels of economic development are relatively minor; as development progresses, productivity differences widen and a “polarization and hierarchization of men’s and women’s work roles” ensue (Forsythe, Korzeniewicz and Durrant, 2000; p. 575). Furthermore, the roles become entrenched and possibly propagated by discrimination that further influences the organization of the labor market.
However, the situation is not static and further economic development eventually brings about a closing of the gap or a reversal of the widening, as occurs under the neoclassical approach. The pace at which the gap closes depends on economic and cultural conditions. Forsythe, Korzeniewicz and Durrant (2000) point to the tight labor markets and increasing demand for female workers that would arise if women were continuously excluded from wage activities, especially as the household becomes more dependent on money generating greater pressure for women to become employed. The authors also argue that policy makers eventually seek greater participation for women in education and training as economies develop and this is accompanied by higher rates of female labor force participation. Finally, “with development women seek to acquire greater bargaining power in their families, for example, by being “better able to support themselves if their husbands desert them or treat them badly”” (Forsythe, Korzeniewicz and Durrant, 2000; p. 576).
Furthermore, cultural traditions play a key role in influencing women’s decisions to take part in the labor force. Boserup (1970) notes that “cultural traditions, including the role of women in the traditional sector of market trade, seem to be a more important factor in determining the place of women in the modern trade sector than is the stage of general ‘modernization’ achieved by the country. Ramirez, Soysal and Shanahan (1997) note that even in societies with strong patriarchal institutional legacies, there is some evidence of globalization having displaced the traditional gender inequalities. Kuznets (1955) inverted U hypothesis of income inequality fits well with Boserup’s interpretation of women in development. Moreover, her analysis has helped to shape policy making and advocacy related to women and development in recent decades. As noted by Forsythe, Korzeniewicz and Durrant (2000), Boserup’s arguments highlighted:
- the hidden contribution of women to development
- called for policy-makers to become more sensitive to the importance of nonmarket activities
- identified women as crucial actors who shape the success or failure of alternative development strategies.
Boserup’s analysis was the catalyst for the Women in Development (WID) approach that has been concerned with the impact of development strategies on women, their impact on gender inequalities and in determining the success of the development effort. The World Bank has acknowledged the WID approach as an important component of its developmental efforts.