Gender equity in labor market opportunities and aggregate technical efficiency: a case of equity promoting efficiency

ABSTRACT

This study applies a panel data stochastic frontier analysis to country data towards examining the effect of gender equity in labour market opportunities upon efficiency in the production of GDP. It finds that aggregate technical efficiency is improved by a widening of women’s labour market opportunities as indicated by a rise in their share of employment, but that this effect is dampened by patriarchal cultural norms whose strength is measured by the proportion of the population tracing its ancestry to ethnic groups who adopted the plough as an agricultural implement. That aggregate technical efficiency rises in women’s share of employment is consistent with improvement in the average quality of the workforce when talented women’s entry to it is eased. That this effect is dampened by patriarchal cultural norms is consistent with them promoting a misallocation of employed women. Additionally, aggregate technical efficiency appears improved by democracy, the control of corruption, and trade-openness.

KEYWORDS:

• Gender equity
• patriarchy aggregate productivity
• technical efficiency
• stochastic frontier model

Disclosure statement

No potential conflict of interest was reported by the author(s).

Notes

¹ In what follows, when we do not specifically mention that the concept of efficiency is technical efficiency, we will be referring to efficiency in a general sense. That is, efficiency can be allocative efficiency, cost efficiency, technical efficiency, or some other type of efficiency.

² For example, Alesina and Rodrik (1994), Persson and Tabellini (1994), and Perotti (1996) document a positive relation between income equality and economic growth.

³ The calculations are simplistic in the sense that they ignore general equilibrium effects.

⁴ Other related studies focus on the effect of female leadership on firm performance. For example, using data on Italian firms, Flabbi et al. (2019) find that the effect of female leadership on firm performance is an increasing function of the proportion of female workers, suggesting that female CEOs are more adept at managing female workers.

⁵ For alternative, yet somewhat less frequently used, flexible functional forms, see Kutlu, Liu, and Sickles (2022).

⁶ See Kutlu and Tran (2019) for a brief survey of heterogeneity in stochastic frontier models.

⁷ For example, STATA’s frontier routine estimates such a model.

⁸ For details about total factor productivity growth decompositions, see Kumbhakar and Lovell (2000).

⁹ This is as opposed to light tools readily deployed by women, such as the hoe and the digging stick, in agro-ecological regions of shifting cultivation.

¹⁰ Due to the translog functional form’s connection with the Taylor series approximation, it is customary to multiply the squared variables by 0.5. This rescaling does not have any qualitative effect upon the results.

¹¹ When calculating the predicted marginal effects of environmental variables on efficiency, we predicted the derivative of $u_{\mathit{it}}$ by the derivative of $\mathit{E}[u_{\mathit{it}}]={\sigma }_{\mathit{u},\mathit{it}}\sqrt{2/\mathit{\pi }}$ with respect to the relevant environmental variable.