Women and Labor Market Changes in the Global Economy: Growth Helps, Inequalities Hurt and Public Policy Matters

Abstract

The paper examines the level and changes in female and male participation rates, employment segregation and female relative to male wages across the world economy. It finds sufficient evidence to support the view that labor markets in developing countries are transformed relatively quickly in the sense that gender differentials in employment and pay are narrowing much faster than they did in industrialized countries. The paper evaluates the inefficiencies arising from persisting gender differentials in the labor market and finds them to be potentially significant. The estimates also indicate that the resulting deadweight losses are borne primarily by women while men gain mainly in relative terms — there are no real winners from discrimination. The paper concludes that growth benefits women at large, inequalities can have significantly adverse effects on welfare, and market-based development alone can be a weak instrument for reducing inequality between the sexes. To break the vicious circle of women's low initial human capital endowments and inferior labor market outcomes compared to men's, the paper proposes greater access of girls to education and of women to training, enforceable equal pay and equal employment opportunities legislation, a taxation and benefits structure that treats reproduction as an economic activity and women as equal partners within households, and a better accounting of women's work to include invisible production.