Empowering women could help close income gaps

In recent editions of TINAN, we’ve taken a look at global poverty and income inequality, exploring the trends and impacts related to these issues. A recent International Monetary Fund (IMF) discussion paper brings a different perspective to the discussion by examining the connection between gender inequality and income inequality.

The study, Catalyst for Change: Empowering Women and Tackling Income Inequality, argues that there is a strong association between several dimensions of gender inequality and income inequality. Although differences exist between developed and developing nations, this association is evident across time and in countries at all levels of development even after controlling for typical drivers of income inequality like technological progress or labour market institutions. Take a look at this infographic for a helpful summary of the report’s findings.

So why is higher gender inequality associated with higher income inequality? The study’s authors provide some explanation. First, gaps in income between men and women contribute directly to income inequality, with unequal workforce participation creating and exacerbating income inequality. Second, women are more likely than men to be employed in the informal sector, where lower wages widen gender income gaps and income inequality. Third, unequal access to education, health services, and finance, which are prevalent between men and women in some countries, are strongly associated with income inequality.

The good news is that by addressing gender inequality, countries can boost economic growth. By climbing one rung on the United Nations’ index of gender inequality could increase economic growth by almost 1 percent. Catalyst for Change provides a number of policy recommendations to help policymakers achieve just that.