Solène Eveillard, ESSEC MiM student and finalist of the CoBS 2019 CSR article competition, researches the economic facts and figures to prove that gender equality brings prosperity not only for women – but for all.
More Gender Equality, More Prosperity for All by Solène Eveillard.
It is often said that improvement starts with measurement and, here, the economic cost of gender inequality can actually be measured in terms of losses in human capital wealth. Human capital wealth is defined as the present value of the future earnings of today’s labor force considering individuals aged 15 and above and a World Bank report of 2018 has estimated that it incurs losses of $160.2 trillion, twice the value of GDP globally, due to gender inequality. Not to mention that this value assumes that women would earn as much as men.
If gender equality in employment was reached, it could increase human capital wealth by 21.7 percent. Moreover, recent calculations by the IMF in 2019 show that reducing the gap between female and male employment rates by 25% by 2025 could increase the global GDP by 3,9% compared with a business-as-usual scenario. The same is true with gender gaps in earnings that not only decrease women’s bargaining power and voice, but also curbs the economic growth: filling the gap between men and women salaries could increase global wealth by 14.0 percent.
These measurements are all the more significant that they incentivize policy-makers to narrow the global gender gap in work. As a result, not only could double the contribution of women to global GDP growth between 2014 and 2025, but it would be equitable in the broadest sense and contribute to prosperity, which implies as much wealth as wellbeing.
Gender Equality and Prosperity Are Not Separable
According to the Legatum Institute, prosperity is about enabling individuals, communities and nations to fulfil their potential by creating an environment of freedom, opportunity and security. Despite this overly expansive definition, prosperity – like gender equality – can be assessed with comprehensive ratings. The Legatum Prosperity IndexTM for instance captures the breadth of prosperity across nine pillars of prosperity based on 104 indicators, each one displaying a statistically significant and meaningful relationship with at least wealth or wellbeing. On the other hand, the Global Gender Gap Index has been first introduced by the World Economic Forum in 2006 as a framework for capturing the magnitude of gender-based disparities. Based on a scale from zero (disparity) to one (parity), it crosses four thematic dimensions: Economic Participation and Opportunity, Educational Attainment, Health and Survival, and Political Empowerment.
A summary comparison of country rankings provided by each index reveals that, for 62% of the countries, the Prosperity IndexTM rank varies within a band 20% either side of the Global Gender Gap Index one. Frequency is even higher for the 30 best-performers and 30 poorest-performers (respectively, 67% and 70%) of the Global Gender Index ranking. The connection thereby suggested is not conclusive, yet it strengthens the instinctive tendency to consider that countries thrive on gender inclusiveness. The equal contribution of women and men in economic and societal transformation is critical. In the context of the Fourth Industrial Revolution, where human creativity is a key resource, societies cannot afford to lose out on the skills, ideas and perspectives of half of humanity. Therefore, achieving gender equality and empowering all women and girls has been set as the fifth Sustainable Development Goal.
Gender Equality in Employment is an Economic Driver
Over the past several decades, the connection between gender inequality and economic growth has become clearer, particularly when it comes to education and employment. Gender inequalities in education, for instance, artificially reduce the pool of talent which societies can draw from. When qualified girls are deprived of further education, the average amount of human capital in a country is reduced and it has an adverse impact on economic performance. With women representing 52.0 percent of the world’s university students, but 49.0 percent of the global labor force, a better exploitation of their potential and knowledge could really entail an increase in productivity.
Moreover, promotion of female education leads to lower births per women, as educated women have greater knowledge about family planning but also greater opportunities, sometimes more attractive than childbearing. And, as documented in economic literature, when lower fertility levels are associated with improved female education, the working-age population grows more rapidly than the overall population, boosting the per capita economic growth.
Besides, women’s growing participation in the paid workforce can change power relations within families. Working women have a greater say in the allocation of the family’s resources, resulting in favorable effects such as higher savings, more productive investments and better use and repayment of credit. Economics literature has also demonstrated that the more empowered women are at home, the higher were the investments in the health and education of children, paving the way for a human capital accrual in the next generation.
A Call for Change in Society
Due to their abilities in micro-management, women could be expected to run their own business much more often than they actually do. However, it would be forgetting the credit gap for formal, women-owned small and medium-sized enterprises estimated at about US$300 billion dollars globally, and the gender gap in account ownership of 9.0 percent in developing economies. Globally, women are accorded only three-quarters of the legal rights that men enjoy, constraining their ability to get jobs or start businesses and make economic decisions that are best for them and their families.
This underlines the urgency for new regulations improving access to education and employment of women. Yet, they would still require important societal changes to ensure that gender equality in labor also reflects on the household management. As prosperity is all about people feeling they have the opportunity and ability to both run and enjoy their lives, the downsides of higher female employment rate should not be ignored. Alongside the difficult access to quality childcare, many dual-income families have to cope with disrupted family schedules, and role negotiation between parents often induces a heavier mental workload for women.
Redistributing care responsibilities is thus key to improve employment opportunities and the quality of working women’s life, but unpaid and non-market work that women perform—running a household, bringing up children—could also be integrated into macroeconomic variables according to Economics researcher James Heintz. Not only due to the fact that women spend roughly three times as many hours in unpaid domestic and care work as men, but especially because these unpaid activities contribute to the welfare of society and affect productive activities in the market economy. As prosperity involves more than just increasing and distributing wealth, the unpaid work of women for their families brings quantifiable value to the economy and participates to the social, cultural and spiritual dimensions of human well-being.
Equal Responsibilities for Gender Equality
Knowing that women account for 49,5% of the population, it seems quite obvious that global prosperity could not be achieved without them accessing education and healthcare, having their ideas and talents nurtured, and their hard work rewarded. However, the unequal exercise of these abilities is exactly what gender inequality stands for. Reducing the gap in rights, responsibilities and opportunities between women and men is definitely a human rights issue, but it also a precondition for, and indicator of, sustainable people-centered development.
Equal opportunities for women not only prevent a waste of human resources and capacities, but also plant the seeds for higher levels of social and economic well-being. Closing economic gender gaps – by fostering diversity and promoting inclusive growth – thus really makes sense to increase prosperity, but, projecting current trends into the future, it may still take 202 years to happen. This is the reason why advancing women’s equality should be a top priority for everyone, including men who are – for now – better represented both in economy and politics.
1] The nine pillars are Economic Quality, Business Environment, Governance, Education, Health, Safety & Security, Personal Freedom, Social Capital and Natural Environment.
 Comparison of 134 countries which have been assessed and ranked by both indexes
 Evidence from countries as varied as Brazil, China, India, South Africa, and the United Kingdom shows that when women control more household income—either through their own earnings or through cash transfers—children benefit as a result of more spending on food and education (World Bank, 2011).
 Evaluation based on data collected between 2000 and 2016 from about 90 countries
- Link up with Solène Eveillard via LinkedIn
- Discover the ESSEC Master in Management (MiM), ranked 3rd in the world, 2019
- Read more features on gender equality on the CoBS blog
- Download the special issue Global Voice magazine Putting Gender Equality on the Table.
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