Getting women into paid employment has more impact on poverty than formalizing women's work or equalizing wage rates – findings from Latin America

April 17, 2009 3 By admin

The International Poverty Centre (IPC) in Brazil churns out some interesting analysis and summarizes them in reader-friendly ‘one pagers’. One recent study looks at the role of gender inequality in explaining income growth, poverty and inequality. Here’s a summary of the one pager. The full paper is here.

The IPC tries to answer the following question: which aspect of gender inequalities should be considered priority in the design of public policies that seek to reduce gender inequalities and poverty? In order to understand the link between poverty and gender inequalities in Latin America, the authors, Joana Costa and Elydia Silva, look closely at eight countries: Argentina, Brazil, Chile, the Dominican Republic, El Salvador, Mexico, Paraguay and Uruguay. Three aspects of gender inequalities in the labour market are apparent in these countries. First, women have a markedly lower rate of economic activity than men. Second, rates of female informality and unemployment are usually higher than those for men. Third, women receive lower hourly remuneration.

They then used some economic wizardry (a partial equilibrium exercise) to arrive at rough estimates of what would happen if each of these three aspects was corrected while holding the other two constant.

The results are summarized in the bar chart. Their conclusions? The reduction of all three aspects of gender inequalities in the labour market would help reduce poverty. The best returns come from dealing with the the comparatively low rate of economic activity among women. If female participation or the labour force increases (simulation 1), the potential reduction of the incidence of poverty would be greatest in Chile (34 per cent) and least in Uruguay (15 per cent). Second, the potential decline in poverty that could be achieved by equalizing women’s and men’s probabilities of being unemployed, formal workers or informal workers (simulation 2) would not be higher than 8 per cent.  Third, poverty declines by up to 14 per cent when female and male hourly remuneration is levelled (simulation 3).

Though it is important to eliminate others aspects of gender inequalities, the researchers therefore conclude that promoting women’s participation in the labour market is the aspect with the greatest potential to promote pro-poor growth and so should be an essential element of public policies. Since caring for children increases the probability of women being economically inactive, one important means of increasing female participation might be to provide childcare facilities, especially to poor women.