Engendering Macroeconomic Theory and Policy

ABSTRACT

Over the past two decades, economists have turned their attention to exploring the role of gender in the macroeconomy. This paper reviews the salient findings of that literature. Research shows that gender gaps in education, health, unpaid labor, employment, and wages have economy-wide consequences and influence the rate of growth. The effects are transmitted via both the supply side of the economy – principally through labor productivity – and the demand side – through business spending, exports, saving, and the balance of payments. In turn, a broad array of macro-level policies, including fiscal, monetary, and trade policies have differential effects by gender that, if unheeded, can undermine macro-policy goals. Their impact depends on the structure of the economy and the gender division of labor in paid and unpaid work. This survey makes clear that incorporation of gender into macro models improves the relevance of macroeconomic theory and can yield better policy results.

KEYWORDS:

• Macroeconomics
• gender differences
• structural economics

JEL Codes:

• E1
• E5
• F41

ACKNOWLEDGMENTS

I am grateful to Caren Grown, Tamoya Christie, Benedicte Leroy De La Briere, and three anonymous referees for helpful comments and to the World Bank, which supported this work.

SUPPLEMENTAL DATA

Supplemental data for this article can be accessed at http://dx.doi.org/10.1080/13545701.2019.1609691.

Notes

1 In the literature, investment is positively related to both profits and sales (demand). Theoretically, wider gender wage gaps may reduce aggregate demand and thus sales, thereby dampening investment through the accelerator effect. The net effect of gender gaps is therefore ambiguous. Though there is little evidence in the literature that the accelerator effect dominates the profitability effect in terms of gender, the reader should have in mind that both effects are possible, with the net effect an empirical question.

2 This refers to the Harrod-Domar model, whereby actual growth rates may diverge from warranted growth rates.

3 Policies include increased investment in women’s education and stronger enforcement of laws against gender discrimination, thereby raising demand for women’s labor. On the supply side, improvements in safety for women and mobility raise women’s labor supply.

4 Kotwal, Ramaswami, and Wadhwa (2011), also find evidence that labor market deregulation stimulated job growth in India in the post-reform period.

5 Numerous authors have identified the positive effect of gender equality on agricultural production. See, for example, Doss and Morris (2001) and World Bank (2011). Darity’s (1995) noteworthy contribution is a micro-level model for LIAEs with gender segregation, whereby men seek to maximize their income from export cash crop production by drawing women out of household/social maintenance activities including subsistence agriculture production.

6 Currency devaluation does not always produce a positive demand-side stimulus, especially in developing countries with rigid imports. The effect may in fact be contractionary (Krugman and Taylor 1978). A fall in women’s wages might also be contractionary, but for different reasons – lower women’s wages may reduce aggregate consumption. However, in export-led economies, that decline is unlikely to outweigh the positive effects on investment and exports.

7 Earlier work econometrically explored whether economic growth itself was found to improve gender equality. That research yielded ambiguous results, and it became clear that growth itself is too broad a category, necessitating a focus on specific policies (Duflo 2012).

8 Aguayo-Téllez, Airola, and Juhn (2010) find evidence that trade liberalization (specifically, the NAFTA agreement) increased the demand for women’s labor in the labor-intensive manufacturing sector in Mexico and reduced gender wage inequality.

9 The Supplemental Online Appendix discusses in greater detail avenues for future research, focusing on areas where adding a gender dimension would sharpen macro models and increase the relevance of their results.

Additional information

Funding

This work was supported by World Bank Group: [grant number NA].

Notes on contributors

Stephanie Seguino

Stephanie Seguino is Professor of Economics at the University of Vermont, USA, and Research Associate at the University of Massachusetts Amherst Political Economy Research Institute. Her research explores the two-way relationship between intergroup inequality by class, race, and gender, and economic growth and development. She is instructor in the African Program for Rethinking Development Economics (APORDE); Associate Editor for Feminist Economics, Journal of Human Development and Capabilities, and Review of Keynesian Economics; and past president of the International Association for Feminist Economics (IAFFE). She has consulted with a number of international organizations, including the UNDP, UNRISD, UNCTAD, World Bank, and USAID.