The High Cost of Gender Inequality in Earnings
Women and girls across the globe face significant obstacles to their economic empowerment, education, healthcare, and overall wellbeing. Achieving gender equality would not only benefit individuals, families, and communities, but it could also help countries reach their full development potential by reducing fertility and under-five mortality, accelerating the demographic dividend, and lowering rates of stunting and malnutrition. However, progress towards achieving gender equality is not without cost. A recent report, Unrealized Potential: The High Cost of Gender Inequality in Earnings, estimates that gender inequality costs households around the world a total of US$4.7 trillion.
The gender pay gap is a result of a complex combination of factors. Differences in educational attainment and occupation choice, as well as unequal treatment and discrimination, contribute to female segregation in the labour market. But even when these differences are controlled for, the gender pay gap remains persistent and widens with age. In particular, mothers are less likely to be in the labor force and tend to work fewer hours when employed, which reduces their earning potential. Fathers, on the other hand, are more likely to be in the labor force and work longer hours when employed — a phenomenon known as the “fatherhood wage premium.”
Gender inequality also affects the distribution of household wealth. In low- and middle-income countries, where wealth inequality is highest, men own more assets than women. This is partly due to a culture of masculinity that promotes male-dominated lifestyles, including devaluing women’s roles and contributions at home, as described in Wendell Berry’s 1973 book The Unsettling of America: Culture and Agriculture. But it is also because of unequal access to finance and credit, which disproportionately affects poorer women.
The chart below shows the proportion of men and women who belong to the top 10%, 1%, and 0.1% of income groups in different countries. It is based on data from the OECD and can be updated by using the “add country” function.
As the chart shows, women all over the world are under-represented in the top 10%, and even within the top 1%, they remain significantly under-represented. However, while women are under-represented in the upper echelons of the earnings distribution, they are overrepresented in low-pay jobs.
Consequently, women are more likely to experience economic insecurity and be subject to a wide range of other negative psychological effects, such as lower self-esteem and feelings of social disgrace. This may explain why so many people, particularly men, are motivated to act in solidarity with women to promote gender equality — as this satisfies their moral obligation to support their fellow citizens and demonstrates that they are not complicit in the injustice of gender inequality. This moral obligation to act in solidarity can be understood through the theory of relative deprivation, which states that individuals are compelled to act in solidarity with members of their group if they believe they are worse off compared to the rest of the population (Leach et al., 2019).