Feminist economics posts

The IMF on gender and macro policy: Feminist economics education recommended

Women need access to income and, as a result, they need good jobs. That is not news. But according to the IMF (Elborgh-Woytek, et al. 2013), the breaking news is that having more women in paid work will make our economies grow faster.

So far, so good. But what about the emphasis on good jobs? What matters for women, especially single mothers, is the conditions they face as workers—their pay, ability to take paid sick days, other benefits such as retirement, the security of the job, and the possibilities for training and promotion. True, the report acknowledges the problem that women’s wages lag men’s, even after controlling for productivity differences (due to gaps in job tenure and education). Legal remedies, they argue, can help address this.

But women don’t just end up with more of the low-wage, precarious jobs than men by accident or due to idiosyncratic prejudiced employers whose behavior reflects outmoded stereotypes. In economies that produce good jobs and bad jobs, our unequal gender systems work to ensure that women are often slotted for the lowest wage, least secure jobs, with men having preferential access to “male breadwinner” jobs (despite this being an outdated assumption about who does paid work and who stays home with the kids).

Do women’s larger share of low-wage low-quality jobs matter, and more to the point, can this help to explain why greater female labor force participation boosts economic growth? The answer is yes and yes. Women are segregated into low-wage jobs (such as in the garment industry, the assembly sector, or in call centers) and this boosts firm profits (the IMF fails to note this rather obvious point). Businesses make money, in other words, on the low value placed on women, reflected in their sub-par wages. And here is the important point to note. Women have come a long way in closing the educational gap with men, but their wages have not kept up with men’s, or with their educational gains, because the jobs they can get come with little bargaining power. Why? Because firms that employ predominantly women tend to be “mobile”: they have the ability to relocate (or outsource) to places where wages are lower if need be. And women tend to be concentrated in industries that are difficult to unionize.

When you couple more education with low wages, what you get is higher profits for businesses. A number of studies (surprisingly not cited in the IMF brief) find that gender wage discrimination (paying women less than what they are worth) has in fact boosted economic growth.* How to overcome this problem is not addressed in the brief, despite the fact that today’s system of global production—where firms have the ability to outsource or relocate—is the major cause of the poor quality of the jobs women can get.

And, no mention is made in the brief of the negative effect of the IMF’s own brand of macroeconomic policies on gender equality. It may be too much to expect the IMF to critique its own policies. But we would expect them to engage with the work of feminist economists who have published scholarly work on how IMF-type macroeconomic policies have fueled gender inequality across the globe. And if they did so, they would see that the solutions they propose—a variety of carrots and sticks to give women the incentive to join the labor force—will not go very far.

Here’s how the IMF-recommended policies create roadblocks to gender equality: The IMF’s emphasis on privatization and limits on government spending that reduce public services end up increasing women’s care burden and that makes it more difficult for them to participate in paid work. (Reducing the care burden requires public spending on infrastructure as well as social services. But public spending has been squeezed, in part due to IMF conditionalities and liberalized financial flows.) Another IMF-sanctioned policy is the emphasis on keeping inflation low and close to zero, instead of on job creation. The result is a harmful competition between men and women over scarce jobs,** with women losing out or facing domestic violence as men lose their male breadwinner roles. Financial deregulation, also supported by the IMF, has contributed to global economic instability, with women often carrying the largest burden for helping the family weather crisis by working longer hours and acting as the emotional shock absorbers for their families.***

The IMF brief fails to address real world challenges. In contrast, feminist economics makes clear that macroeconomic policy can help or inhibit gender equality. The current emphasis on neoliberal policies advanced by the IMF—inflation targeting, and trade, investment, and financial liberalization—all have imposed significant burdens on women as consumers, as carers, and as workers.

The IMF should be called upon to engage with the full literature on gender and growth – in peer-reviewed academic journals like Feminist Economics, World Development, the Cambridge Journal of Economics, and others, rather than selectively choosing the research it wishes to emphasize and ignoring the rest. In an organization that emphasizes free markets, it does not appear to be willing to engage in the free market of ideas.

* See, for example, Seguino (2000), Busse and Spielmann (2006), and Berik, Rodgers, and Seguino (2009).

** Braunstein and Heintz (2008).

*** Elson (2012).


Blog references:

Berik, Gunseli, Yana van der Meulen Rodgers, and Stephanie Seguino. 2000. “Feminist Economics of Inequality, Development, and Growth.” Feminist Economics 15(3): 1-33.

Braunstein, Elissa and James Heintz. 2008. “Gender Bias and Central Bank Policy: Employment and Inflation Reduction.” International Review of Applied Economics 22(2): 173-86.

Busse, Matthias and Christian Spielmann. 2006. “Gender Inequality and Trade.” Review of International Economics 14(3): 362-370.

Elborgh-Woytek, Katrin, Monique Newiak, Kalpana Kochhar, Stefania Fabrizio, Kangni Kpodar, Philippe Wingender, Benedict Clements, and Gerd Schwartz. 2013. “Women, Work, and the Economy: Macroeconomic Gains from Gender Equity.” IMF Staff Discussion Note. September 2013.

Elson, Diane. 2012. “Social Reproduction in the Global Crisis: Rapid Recovery or Long-Lasting Depletion?” in Peter Utting, Shahra Razavi and Rebecca Varghese Buchholz (eds.) The Global Crisis and Transformative Social Change. New York: Palgrave Macmillan for UNRISD, pp. 63-80.

Seguino, S. 2000. “Gender Inequality and Economic Growth: A Cross-Country Analysis.” World Development 28(7): 1211-1130.

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