Toward Gender Equality: The Role of Public Policy

Summary

The following selection is taken from Toward Gender Equality: The Role of Public Policy, published by the World Bank.

?1995 The International Bank for Reconstruction and Development

Contents

Introduction

Progress to Date

Why Do Gender Inequalities Persist?

Strategies for the Future

Conclusion

Introduction

THREE messages echo throughout this document:

The causes of gender inequality are complex, linked as they are to the intrahousehold decisionmaking process. However the decisions are made, the intrahousehold allocation of resources is influenced by market signals and institutional norms that do not capture the full benefits to society of investing in women. Low levels of education and training, poor health and nutritional status, and limited access to resources depress women's quality of life and hinder economic efficiency and growth. It is therefore essential that public policies work to compensate for market failures in the area of gender equality. These policies should equalize opportunities between women and men and redirect resources to those investments with the highest social returns. Of these investments, female education, particularly at the primary and lower-secondary level, is the most important, as it is the catalyst that increases the impact of other investments in health, nutrition, family planning, agriculture, industry, and infrastructure. Women themselves are agents for change because they play a key role in shaping the welfare of future generations. Public policies cannot be effective without the participation of the target group -- in this case, women, who make up more than half the world's people. Their views need to be incorporated into policy formulation.

Progress to Date

Over the past two decades considerable progress has been made in reducing the gender gap worldwide.

In 1960, for every 100 boys enrolled in primary school, there were 65 girls. In 1990 the ratio had risen to 85. In 1980 an average six-year-old girl in a developing country could expect to attend school for 7.3 years. By 1990 this figure had increased to 8.4 years. Since the 1950s the female labor force has grown twice as fast as the male labor force. Worldwide, more than 40 percent of women over 15 years of age are now in the labor force; in developing countries women account for 30 percent of the labor force. (These figures, it should be noted, do not fully reflect women's participation in the informal sector or as unpaid family members in agriculture.)

Nevertheless, inequalities between men and women persist in many important areas.

Despite women's biological advantage, their mortality and morbidity rates frequently exceed those of men, particularly during childhood and the reproductive years. Traditionally, women are employed in lower-paying jobs and in a narrower range of occupations than are men. Women's wages are typically only 60-70 percent of wages earned by men. Whether in private sector employment or public sector decisionmaking, women are less likely to be in positions of responsibility than are men

Why Do Gender Inequalities Persist?

The causes of the persistent inequality between men and women are only partially understood. In recent years attention has focused on inequalities in the allocation of resources at the household level, as seen in the higher share of education, health, and food expenditures boys receive in comparison with girls. The decisionmaking process within households is complex and is influenced by social and cultural norms, market opportunities, and institutional factors. There is considerable proof that the intrahousehold allocation of resources is a key factor in determining the levels of schooling, health, and nutrition accorded household members.

Inequalities in the allocation of household resources matter because education, health, and nutrition are strongly linked to well-being, economic efficiency, and growth. Low levels of educational attainment and poor health and nutrition aggravate poor living conditions and reduce an individual's capacity to work productively. Such economic inefficiency represents a significant loss to society and hampers future economic growth.

Social returns to investments in women's education and health are significantly greater than for similar investments in men.

The social and economic losses are greatest when women are denied access to basic education and health care. Data from around the world show that private returns to investments in education are the same for women as for men and may even be marginally higher (Psacharopoulos 1994). More importantly, social returns (that is, total benefits to society) to investments in women's education and health are significantly greater than for similar investments in men, largely because of the strong correlation between women's education, health, nutritional status, and fertility levels and the education, health, and productivity of future generations. These correlations are even stronger when women have control over the way resources are allocated within the household.

Wage differentials between women and men in the market are closely linked to educational levels and work experience. Since, on average, women earn 30-40 percent less than men, it is not surprising that fewer women than men participate in the labor force. This wage disparity, reinforced by discriminatory institutional norms, in turn influences the intrahousehold division of resources. A vicious circle ensues as households invest less in daughters than in sons in the belief that investment in girls yields fewer benefits. As a result, many women are unable to work outside the household because they lack the education or experience that men have.

The decision not to participate in the labor force does not necessarily reflect a woman's own choice, nor does it always correspond to the optimum use of household resources. Furthermore, the market wage does not take into account the social benefits of educating and hiring women. Discrimination in households and in the market carries not only private costs for individuals and households but social costs for society as well.

Public policies for reducing gender inequalities are therefore essential for counteracting market failure and improving the well-being of all members of society. Investing in women's education and health expands their choices in labor markets and other income-generating activities and increases the rate of return on a household's most valuable asset -- its labor.

The decision to allocate women's time to the type of nonwage work women typically carry out within the household, such as child care, food preparation, and, in low-income countries especially, subsistence farming and the collection of fuelwood and water, has less to do with economics than with social conventions and norms. These norms can have a strong influence on the household division of labor, even in industrial economies, where women's levels of human capital are equal to -- and sometimes higher than -- those of most men.

The economy pays for this inequality in reduced labor productivity today and diminished national output tomorrow.

Whether this division of labor is appropriate is, essentially, for society to decide. However, there is no doubt that women's entry into the labor market and other spheres of the economy is directly affected by the extensive amounts of time they traditionally devote to household maintenance and family care. Most men do not make similar allocations of time in the home. Such inequality constrains women's employment choices and can limit girls' enrollment in schools. The economy pays for this inequality in reduced labor productivity today and diminished national output tomorrow. Public policy can address inequalities in the household division of labor by supporting initiatives that reduce the amount of time women spend doing unpaid work. Examples of such interventions include improved water and sanitation services, rural electrification, and better transport infrastructure.

Constraints on female employment opportunities arising from the household division of labor are compounded by institutional norms operating within the labor market. Although overt wage discrimination is illegal in many countries, employers frequently segregate jobs or offer less training to women workers. Employers often perceive the returns to investing in women workers as lower than those for men, mainly because of women's primary role in childrearing.

Lack of access to financial services, to land, and to information and technology compounds the unequal treatment of women. Requirements for collateral, high transaction costs, and limited mobility and education contribute to women's inability to obtain credit. When women do have access to credit, the effect on household and individual well-being is striking. Borrowing by women is linked to increased holdings of nonland assets, to improvements in the health status of female children, and to an increased probability that girls will enroll in school. Independent access to land is associated with higher productivity and, in some cases, with greater investments by women in land conservation.

Strategies for the Future

If the benefits from investing in girls and women are so great and can be quantified, why do households and employers underinvest in women? The main reason is that, as discussed above, markets fail to capture the full benefit to society of investing in women and girls. Where the market fails or is absent, government must take the lead. Public policy can contribute, directly and indirectly, to reducing gender inequalities by, for example:

l Modifying the legal and regulatory framework to ensure equal opportunities

l Ensuring macroeconomic stability and improving microeconomic incentives

l Redirecting public policies and public expenditures to those investments with the highest social returns

l Adopting targeted interventions that correct for gender inequalities at the microlevel.

Modifying the law to eliminate gender discrimination and equalize opportunities for women and men is an important first step. However, legal reform by itself does not ensure equal treatment. Further public action is required to make sure that gender-neutral laws are enforced at the national and local levels.

Sound economic policies and well-functioning markets are essential for growth, employment generation, and the creation of an environment in which the returns to investing in women and girls can be fully realized. Economic instability and price distortions can hinder the process. Consequently, sound macroeconomic management is critical. In general, two sets of policies are necessary: one emphasizing macroeconomic stability and the elimination of price distortions, the other focusing on labor-demanding growth and a reorientation in public spending toward basic services with high social returns -- such as education, health care, and water supply.

Gender inequalities in the distribution of the benefits of public spending frequently arise because of a bias within households that limits women's access to publicly provided services. In addition, the services provided by public spending often are of less benefit to women than to men. Public policy can help remedy this problem by rearranging expenditure priorities among sectors and within the social sectors. It can ensure support for those services and types of infrastructure that offer the highest social returns to public spending and that are most heavily used by women and children, such as water supply and sanitation services and rural electrification.

Finally, general policy interventions may not be enough, and programs that specifically target women and girls may be required. Targeting is justifiable on two grounds. First, because women are disproportionately represented among the poor, targeting women can be an effective strategy for reducing poverty (broadly defined to include limited access to services, resources, and other capability-enhancing factors). Second, where gender differences are wide, targeting -- for example, the provision of stipends so that girls can attend school -- may be needed to capture social gains and increase internal efficiency.

Conclusion

Governments can no longer afford not to invest in women. The evidence on the high private and social returns to investments in women and girls cannot be ignored. By directing public resources toward policies and projects that reduce gender inequality, policymakers not only promote equality but also lay the groundwork for slower population growth, greater labor productivity, a higher rate of human capital formation, and stronger economic growth. However, none of these developments can be sustained without the participation of women themselves. Governments and collaborating institutions must listen more carefully to the voices of individual women, including policymakers, and to women's groups. By working with others to identify and implement policies that promote gender equality, governments can make a real difference to the future well-being and prosperity of their people.