Legal inequality and women’s economic opportunity

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There is a lot of emphasis worldwide on gender equality today, but nothing compares to the hardship that women face in developing countries. This is a priority that we need to take seriously – recognizing that women are 50 percent of the population, and that their welfare is important.

One of the most pervasive forms of gender discrimination is the unequal treatment of women and men by the law -- but we are missing a complete picture of the relative severity, evolution and impact of legal gender discrimination around the world. As part of our effort to fill this knowledge gap, the Women Business and the Law (WBL) study now provides a newly expanded database that covers 190 economies over fifty years. It aims to capture inequality in legislation related to a woman’s access to employment and entrepreneurial activity.

In a recent World Bank working paper Gendered Laws, we use this database to compare economies where women have the same legal rights as men with those where the legal gender gap is large. One objective of this research is to deepen our understanding of how gender discrimination by the law affects women’s economic opportunity.   

To be sure, there is a growing body of research which suggests that addressing legal inequalities does matter for women’s economic empowerment. But earlier evidence was generally limited to a small set of countries typically in developed economies at a specific point in time. The expanded database offers an opportunity to see whether such findings hold when measured on a broader scale over extended periods of time. 

In our paper, we examine whether improving the legal treatment of women has contributed to more equal labor market outcomes. Panel estimations based on the WBL dataset reveal several encouraging correlations: leveling the legal playing field between men and women is associated with more women participating in the workforce, a closing of the wage gap between men and women, and lower occupational segregation.

The trickier question is measuring the causal effect of legal reforms. Using appropriate econometric techniques, we establish that the first correlation can be interpreted as a causal relationship. We find that more equal laws lead to higher female labor force participation, albeit the direct effect of legal reforms is small, suggesting that factors other than laws are also responsible. 

This is not surprising given that legal discrimination is only one among many sources of gender imbalances. Passing better laws does not guarantee that these laws will be enforced, especially in countries with social norms that hold women back from participating in the formal economy. 

Nevertheless, laws do matter because they are actionable in the short run, compared to norms and attitudes which often take longer to change. The finding of a causal effect of legal reforms on female labor force participation suggests that laws can lead to positive change. And it is worth emphasizing that according to our paper, the effect of legal reforms increases with the passage of time after their initial enactment.

Achieving gender equality is not a short-term process. It requires strong political will and a concerted effort by governments, civil society, and international organizations among others, but legal reforms can play a foundational role as an important first step.   

The 2020 edition of Women Business and the Law shows that in the past two years, 40 economies enacted 62 legal reforms in total, but the picture varies widely from region to region with scores ranging from 49.6 in the Middle East and North Africa to 94.6 in high-income OECD countries on a scale from 0 to 100. Globally, women are still only three-quarters equal to men on average in the legal areas measured. 

We are hopeful that the WBL database will serve as the basis for research for years to come. Once we have a comprehensive picture of global de jure discrimination, we can link it to measures of de facto discrimination and investigate which polices and interventions are best suited to empower women and enable them to make economic decisions that are best for them, their families and their communities.

Additional resources:

Working Paper: Gendered Laws

Website: Women, Business and the Law

Report: Women, Business and the Law 2020

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