Women in the labor market: Powering Growth Through Diversity

According to the World Bank, globally about 50% of women participate in the labor market, i.e. are working or looking for work. Among men, this indicator is at the level of 80%. However, this is the global average. Obviously, in Western countries, the percentage of working women will be higher, while in the Middle East, on the contrary, it is much lower than 50%.

For example, statistics show that women are paid 13% less than men, assuming equality in education, productivity, etc. In other words, it turns out that women can earn 13% less, and gender is the only difference between the groups studied.

It also found out that women are underrepresented in management positions, on boards of directors, etc. That said, scientific and consulting agency data at least refute the notion that women are inferior and unsuitable for any positions.

On the contrary, some studies show that women are better predisposed to managing large companies. There is a statistically significant difference between the average debt load of companies run by women and those run by men.

In addition, greater gender and ethnic diversity increases the average profits of companies in national rankings, as well as improving other key metrics compared to more single-sex companies.

This correlation was found in a study by the McKinsey Group, a widely recognized global leader in business consulting. The empirical base of the study is 366 public companies from different regions of the world, so we cannot say that the sample is not statistically significant and the probability of statistical error is high.

We present this data to refute the possible counterargument that economic inequality is due to women's worse abilities. Running a corporation requires many highly developed skills, and the above data best demonstrate that there is no such thing as male intellectual superiority.

In general, the tradition of intellectual discrimination against women goes back centuries, and most sexist theses have either already been disproved by science or, given the current situation, will be.

For example, until recently, the popular belief in society and even in science was that women's brains are smaller or have fewer neurons. Science has disproved this. In the past and even now, you may hear that female intelligence is inferior to male intelligence, but this too has been disproved.

Researchers believe that a possible explanation for this success of women is that they have higher emotional intelligence. In the last 30-40 years, the importance of emotional intelligence in business has become increasingly popular. Having a well-developed emotional intelligence is now one of the key competencies of a good manager, and this is an accepted view in the Western business environment.

It is important to note here that we do not exclude the possible influence of equality ideology on these studies, and there is not enough data to draw a definitive conclusion. On the other hand, some of the data are purely statistical and can only be interpreted in one direction.

Nevertheless, in all countries, the representation of women on boards is far from the ideal 50/50 ratio. In the US, the share of women on boards averages 16%. In other countries, the situation is even worse.

A legitimate question arises: why, despite these and other data, as well as sexism in general, gender inequality in the global labor market persists? Until recently, this question could not be fully answered due to the discontinuity of statistical data. This data was first collected by Claudia Goldin, winner of the 2023 Nobel Prize in Economics.

Claudia has a long history of collecting and organizing data. One of the strengths of her work is that she analyzed data on the role of family in discriminating against women in the labor market. Another strength of her research is the three centuries of data, meaning that she collected statistics starting in the 18th century.

The first interesting fact she found was that, contrary to conventional wisdom, women's labor market participation had a U-shaped curve rather than a gradually increasing one.

In other words, women's participation in the labor market was gradually increasing, but after the Industrial Revolution it sharply decreased, and after some time it sharply increased again. The reason for this is simple: before industrialization, women could combine domestic duties with running a home business or working in agriculture, for example. Before industrialization, many jobs could be done from home.

Does marriage really predetermine gender inequality?

In brief, yes. Marriage and children have been found to be a major cause of gender inequality. It's simple. In regions or countries where marriage rates have declined, female employment has increased. Another mechanism for creating inequality is the outright banning of married women from working in past centuries. Even after such laws were repealed, in many places inequality persisted because of the inertia of the ban and the lack of respect for women's labor rights.

Such developments are not uncommon. For example, in the US, after the official abolition of slavery, blacks had no labor rights or alternatives, so they also worked on plantations, with the same horrible conditions, production standards, etc. In Europe, the same thing happened in almost all countries. In India, the ban on caste did not change the labor market or improve social mobility for discriminated groups. Social patterns often shape society in spite of laws.

When bans on married women's employment were lifted, it turned out that many jobs were already taken by men. In the language of economics, this is called structural unemployment. Even if women found jobs, for example, with 18-hour shifts (absolutely common in those days), it turned out that it was unrealistic to combine domestic duties with such work. The fact that women did not invest in their education also had a strong impact.

What factor brought the positive trend back?

You may think this is a joke, but the advent of oral contraceptives was one of the main factors that brought back the positive trend. A detailed discussion of the mechanism of this factor's influence is beyond our expertise and the topic of this article, so let's move on.

Interestingly, the emergence of oral contraceptives not only dramatically changed the dynamics, but also significantly affected its essence. Starting in the 1960s of the 20th century, women began to choose jobs that required serious training more often. In the next part, we'll talk more about why the dynamics have changed and what can be done to reduce inequality.