COUNTRIES around the globe are losing $160 trillion in wealth because of differences in lifetime earnings between women and men. This amounts to an average of $23,620 for each person in the 141 countries, the World Bank Group (WBG) said in its new study shared to Database.
“The world is essentially leaving $160 trillion on the table when we neglect inequality in earnings over the lifetime between men and women,” said World Bank CEO Kristalina Georgieva.
“This is a stark reminder that world leaders need to act now and act decisively to invest in policies that promote more and better jobs for women and equal pay at work,” she added.
The WBG study, “Unrealized Potential: The High Cost of Gender Inequality in Earnings,” examined the economic cost of gender inequality in lost human capital. It came before the recent meeting of the G7, headed by Canada, which committed to ensure gender equality and women’s empowerment integrated across all G7 themes, activities and initiatives.
The study said: “In nearly every country today, women face barriers to fully participate in the work force and earn as much as men. Because of this, women account for only 38 percent of their country’s human capital wealth, defined as the value of the future earnings of their adult citizens—versus 62 percent for men. In low income and lower-middle income countries, women account for just a third or less of human capital wealth.”
Programs and policies that make it easier for women to get to work, access basic infrastructure and financial services, and control land could help achieve gender equality in earnings, the study pointed out.
“Human capital wealth accounts for two-thirds of the global changing wealth of nations, well ahead of natural and other forms of capital,” said Quentin Wodon, WBG lead economist and author of the study. “Because women earn less than men, human capital wealth worldwide is about 20 percent lower than it could be,” he added.
According to the study, losses in wealth from inequality in earnings between men and women vary by regions. The largest losses, each between $40 trillion and $50 trillion, are observed in East Asia, the Pacific, North America, Europe and Central Asia.
This is because these regions account for most of the world’s human capital wealth. Losses in other regions are also substantial. In South Asia, losses from gender inequality are estimated at $9.1 trillion, while they are estimated at $6.7 trillion in Latin America and the Caribbean and $3.1 trillion in the Middle East and North Africa.
In Sub-Saharan Africa, the losses are estimated at $2.5 trillion. While losses in low-income countries are smaller in absolute terms than in other regions, as a share of the initial endowment in human capital, the losses are larger than for the world.
The study is part of a broader research program at the World Bank that benefits from support from government of Canada, the Children’s Investment Fund Foundation and the Global Partnership for Education.
The issue of gender equality in earnings is fundamental and it requires interventions across the lifecycle. Future work will consider other economic costs related to gender inequality, including those related to fertility and population growth.
“There are estimates showing the costs and benefits of gender equality to key economic sectors and economic growth,” said WBG Senior Director for Gender Caren Grown.
“By focusing on wealth, this study is a unique addition to that literature since wealth, and especially human capital, is the assets base that enables countries to generate future income,” she said.
The study stressed that “wealth is the assets base that enables countries to produce income gross domestic product or GDP. A country’s wealth includes various types of capital. Produced capital comes from investments in assets, such as factories, equipment or infrastructure. Natural capital includes assets such as agricultural land and other renewable and nonrenewable natural resources.”
The study further stated: “This first note in the series on the cost of gender inequality focuses on the losses in national wealth due to gender inequality in earnings. There is a substantial literature on the impact of gender inequality on economic growth and performance. By focusing on wealth, the approach used for measurement in this note is different.
“However, the largest component of countries’ wealth typically resides in their people. As noted in the recent World Bank study on the Changing Wealth of Nations, human capital measured as the present value of the future earnings of the labor force accounts for two-thirds of global wealth.
“If gender equality in earnings were achieved, countries could increase their human capital wealth, and thereby their total wealth substantially. This would enable them to strengthen the sustainability of their development path. Gender inequality has major economic implications for women, communities and countries in a range of areas.
“While the cost of gender inequality—in terms of human capital losses —for development is not solely due to losses in earnings, the impact of gender inequality on earnings is key. This is the area on which this note focuses.”
To reach the writer, e-mail cecilio.arillo@gmail.com.