Does Gender Inequality Hinder Development and Economic Growth

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  P󰁯󰁬󰁩󰁣󰁹 R󰁥󰁳󰁥󰁡󰁲󰁣󰁨 W󰁯󰁲󰁫󰁩󰁮󰁧 P󰁡󰁰󰁥󰁲 6369 Does Gender Inequality Hinder Development and Economic Growth? Evidence and Policy Implications Oriana Bandiera  Ashwini Natraj Te World Bank Development Economics Vice Presidency Partnerships, Capacity Building UnitFebruary 2013 WPS6369    P  u   b   l   i  c   D   i  s  c   l  o  s  u  r  e   A  u   t   h  o  r   i  z  e   d   P  u   b   l   i  c   D   i  s  c   l  o  s  u  r  e   A  u   t   h  o  r   i  z  e   d   P  u   b   l   i  c   D   i  s  c   l  o  s  u  r  e   A  u   t   h  o  r   i  z  e   d   P  u   b   l   i  c   D   i  s  c   l  o  s  u  r  e   A  u   t   h  o  r   i  z  e   d  Produced by the Research Support Team  Abstract  Te Policy Research Working Paper Series disseminates the findings of work in progress to encourage the exchange of ideas about development issues. An objective of the series is to get the findings out quickly, even if the presentations are less than fully polished. Te papers carry the names of the authors and should be cited accordingly. Te findings, interpretations, and conclusions expressed in this paper are entirely those of the authors. Tey do not necessarily represent the views of the International Bank for Reconstruction and Development/World Bank and its affiliated organizations, or those of the Executive Directors of the World Bank or the governments they represent. P󰁯󰁬󰁩󰁣󰁹 R󰁥󰁳󰁥󰁡󰁲󰁣󰁨 W󰁯󰁲󰁫󰁩󰁮󰁧 P󰁡󰁰󰁥󰁲 6369 Does the existing evidence support policies that foster growth by reducing gender inequality? Te authors argue that the evidence based on differences across countries is of limited use for policy design because it does not identify the causal link from inequality to growth. Tis, however does not imply that inequality-reducing policies Tis paper is a product of the Partnerships, Capacity Building Unit, Development Economics Vice Presidency. It is part of a larger effort by the World Bank to provide open access to its research and make a contribution to development policy discussions around the world. Policy Research Working Papers are also posted on the Web at http://econ.worldbank.org. Te author may be contacted at O.Bandiera@lse.ac.uk.are ineffective. In other words, the lack of evidence of a causal link is not in itself evidence that the causal link does not exist. Detailed micro studies that shed light on the mechanisms through which gender inequality affects development and growth are needed to inform the design of effective policies.  Does Gender Inequality Hinder Development and Economic Growth? Evidence and Policy Implications Oriana Bandiera 1  and Ashwini Natraj 2   JEL codes: O40, J16, O15 1  London School of Economics 2  London School of Economics   2 1. Introduction Gender inequality has been at the core of the policy debate concerning development for the past few decades. This policy concern has been matched by an equal level of scholarly interest, which has produced a large body of research intended to show that reducing gender inequality leads to development for individual women and for women in general. This evidence has been used to provide support for inequality-reducing policies as a valid and effective tool to directly and indirectly promote development. In this paper, we review the existing evidence from cross-country studies of inequality-reducing policies to assess whether and how this evidence can be used to inform policy. Our analysis shows that, although it is helpful to identify and understand aggregate patterns, evidence from cross-country studies is of limited use for policy design. Cross-country research designs have three features that limit their value and use for policy implications. First, the direction of causality has not been identified. For example, the fact that the gender gap in education is lower in richer countries is consistent with both equality fostering development and development fostering equality. Distinguishing between these alternative interpretations is central to effective policy because policies that promote gender equality do not foster development unless causality runs from equality to development rather than vice versa. Second, cross-country studies are typically silent on the mechanisms that drive or affect the relationship between gender inequality and development, and identifying these mechanisms is critical for the design of more effective policies. For instance, whether a policy that promotes girls’ schooling (e.g., with conditional cash transfers) directly fosters development through an increase in women’s labor force participation depends on the reason girls’ education was at a low level in the first place. If this situation is driven by social norms that limit women’s participation in the labor market and hence also limit or reduce girls’ return to schooling, exogenously increasing girls’ return to schooling will not increase labor market participation and development or economic growth. An understanding of the values, social norms, and other mechanisms involved in the relationship between gender
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