Does gender discrimination in social institutions matter for long-term growth?
March 2016 - A recent study by the OECD indicates that gender-based discrimination in social institutions impedes economic growth. Deeply entrenched discrimination in formal or informal laws, social norms or practices poses significant and enduring obstacles for women worldwide. According to the OECD study, there is a strong negative relationship between gender-based discrimination in social institutions, measured by the OECD’s Social Institutions and Gender Index (SIGI), and income per capita. This negative influence is found to be stronger for low-income countries and seems to affect the level of income by lowering both the level of human capital and labour force participation among women, and productivity (Ferrant and Kolev, 2016).
The economic cost of gender-based discrimination in social institutions is particularly high. The income loss associated with current levels of gender discrimination could be substantial, estimated at up to USD 12 trillion, or 16% of current global GDP. At the same time, reducing gender-based discrimination in social institutions through the right policy measures could yield substantial economic benefits, leading to an annual increase in the world GDP growth rate of 0.03 to 0.6 percentage points by 2030, depending on the scenario.
Notes: GDP forecasts are measured in terms of 2011 real GDP per capita at current PPPs. We forecast the world income in 2030 if discriminatory social institutions would be reduced under four possible scenarios: (i) business-as-usual (BAU), using the available growth forecast from the International Macroeconomic Data Set compiled by the Economic Research Service of the United States Department of Agriculture and assuming no change in the level of gender-based discrimination in social institutions between 2015 and 2030; (ii) upgrade in the SIGI classification, considering that each country would decrease its level of gender-based discrimination in social institutions to attain a lower group along the SIGI classification in 2030; (iii) best-in-region, using the best performer of the region as a benchmark and assuming total homogeneity within the region in 2030; and (iv) gender parity, assuming that countries would have eradicated gender-based discrimination in social institutions by 2030.
Read the working paper: Does gender discrimination in social institutions matter for long-term growth?