Great new IMF paper puts women’s rights at the heart of tackling income inequality

November 10, 2015

     By Duncan Green     

The IMF continues to surprise an old lag like me who cut his policy teeth condemning it as the incarnation of extremeGender Inequality protest India
market idolatry and anti-poor structural adjustment programmes in the 80s and 90s. Read its new ‘staff discussion note’, Catalyst for Change: Empowering Women and Tackling Income Inequality to see why.

The authors point out that ‘Income inequality and gender-related inequality can interact through a number of channels. First, gender wage gaps directly contribute to income inequality. Furthermore, higher gaps in labor force participation rates between men and women are likely to result in inequality of earnings between sexes, thus creating and exacerbating income inequality. Differences in economic outcomes may be a consequence of unequal opportunities and enabling conditions for men and women, and boys and girls.’

The paper crunches the data in typical IMF fashion and finds that it’s all true: ‘gender inequality is strongly associated with income inequality….. These results hold for countries across all levels of development, however the relevant dimensions of gender inequality vary. For advanced countries—with largely closed gender gaps in education and more equal economic opportunities across sexes— income inequality arises mainly through gender gaps in economic participation. In emerging markets and low-income countries, inequality of opportunity, in particular gender gaps in education and health, appear to pose the main obstacle to a more equal income distribution.’
IMF gender inequalityYou got that? The big driver of gender inequality in poor countries is education and healthcare, not just getting women into paid work. They illustrate this with a break down of causes of gender income inequality (not entirely sure, but I think ‘maternal mortality’ is a proxy variable for healthcare in general).

The most powerful section is the policy recommendations:

‘Redistribution complements but is not a substitute for gender-specific policies geared to reducing gender and income inequality. Previous IMF work has shown that redistribution generally has a benign effect on growth, and is only negatively related to growth in the most strongly redistributive countries. Therefore, redistributive policies can help lower income inequality directly and if not excessive be pro-growth. However, in order to ameliorate deeper inequality of opportunities, such as unequal access to the labor force, health, education and financial access between men and women, more targeted policy interventions are needed as a complement to redistribution. Some of these policy options are discussed in the remainder of this section.

A significant decrease in gender gaps will require work on many dimensions.’

And they go on to list them:

  • Remove gender-based legal restrictions
  • Create fiscal space for priority expenditures: education, infrastructure like roads and electrification, and access to health services
  • Revise tax policies (eg tax credits and benefits for low wage earners, mainly female)
  • Implement well-designed family benefits (eg parental leave, childcare, flexible work)
  • Gender Budgeting ‘examines the gender impact of government expenditures, policies, and programs and can reduce gender inequalities in education, employment, and health outcomes, among other measures.’
  • Make finance accessible to women.

So what are the flaws? I sent my comments to our gender team, and got some interesting thoughts on the ‘what’s so that explains the difference in our salariesmissing’ – always the hardest bit to identify in any report. This from Francesca Rhodes, Irene Muñoz and Kim Henderson:

‘Overall we would say the focus continues to be on individual women, rather than the approach taken by UN Women in their ‘Progress’ report on changing the way the economy is organised to support human rights and gender equality (through macroeconomic policy, labour market regulation, social transfers, raising and spending more public resources in gender responsive way).

The top three asks from Diane Elson in this area are:

  1.    Demand a living wage
    2.    Increase support for women’s organisations
    3.    Improve public services and infrastructure funded with gender responsive tax

The IMF touch on the last one, and note minimum wages are related to reduced income inequality, but there is no call for living wages, which would benefit many women and reduce gender and income inequality. And no comment on women’s and women’s rights organization’s agency as key to support changes in gender equality – which may not be the role of the IMF to support, but they could comment. So we welcome and it’s interesting to see the IMF discussing gender in this way, and we hope to see the policies and lending practices of the IMF change to take this approach into account, especially on monitoring the impact of economic policies on women and girls. However we continue to have concerns the recommendations don’t go far enough to be transformative.’

But part of me is still pinching myself and saying ‘can we really be having this conversation about the IMF?’ Or hearing its boss talk about gender inequality as she opens Oxfam’s new office in Washington? Amazing how far it has come in a relatively short space of time.


November 10, 2015
Duncan Green