Effects Of Gender Inequality In Economic Growth

Gender-based inequality in education and economic growth: Cross-country evidence

Klaudia Prodani, Progress Report

I. Introduction

Many developing countries exhibit significant gender inequality in education opportunities. In assessing the importance of these inequalities, one can distinguish between intrinsic and instrumental concerns. This paper focuses on the instrumental effect of gender inequality in education on economic development. Using cross-country regressions, it examines how gender bias in education reduces long-term economic growth.

II. Literature Review

The past three decades have seen a renewed interest in the determinants of economic growth. Romer (1986), Lucas (1988), and Barro and Sala-i-Martin (1995) defend the possibility

As a result, the average innate ability of educated children is lower than it would be if there were equal education opportunities for boys and girls. This lower level of average human capital in the economy would in turn slow economic growth. Alternatively, the low human capital level could affect economic growth indirectly by reducing the investment rate, because countries with lower levels of human capital have smaller returns on investments.

Similar reductions in human capital levels are obtained if we consider female and male human capital as imperfect substitutes subject to declining marginal returns to education. In this case, human capital and thus economic growth would be affected by declining returns to higher male education (as opposed to the selection of less able males mentioned

lower gender inequality in education, can affect economic growth in four ways. First, the reduction in population growth would enable investment to be used for capital deepening as opposed to capital widening, which would in turn encourage economic growth. Second, lower fertility rates increase savings and hence growth by reducing the dependency burden. The last two effects, termed “demographic gifts” by Bloom and Williamson (1998), refer to the temporary effects that a low fertility rate has on the growth of the working-age population. Specifically, a growth in the working-age population would lead to an increase in per capita economic growth by necessitating more investment in capital equipment and by the fact that more workers (assuming that increases in the labor force would be absorbed by higher levels of employment) would be sharing their wages with fewer dependents. These temporary effects are thought to have played a significant role in the rapid growth in East and Southeast Asia (Bloom and Williamson