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IWD: running to stand still

Chief Economist, ANZ

2024-03-07 00:00

The journey toward gender parity has been slow. But the economic case for faster progress is only growing.

International Women’s Day is a day for everyone, regardless of gender identity, to celebrate the achievements of women and mark the day as a call to action to accelerate gender parity. The World Economic Forum’s Global Gender Gap Report documents some progress, though it is glacial. The backdrop is also shifting.

Google searches for trends associated with demographics – such as birth rate, longevity and population – are around their highest in two decades. I have seen more written about demographics in the past year than I can recall in other years. China has been in focus, but also Iran, Korea, the US, Finland, and the whole of Africa. In the Financial Times, Martin Wolf nominates demographics as one of his five “big features” of the global economy.

The causes are complex and not easily amenable to policy intervention.

Korea’s fertility rate of 0.72 is the lowest in the world. Anna Louie Sussman says Korean women feel Korean culture is “hopelessly patriarchal”. Anna Rotkirch at Finland’s Population Research Institute suggests “the strange thing with fertility is nobody really knows what’s going on”. “It’s not primarily driven by economics or family policies” she writes. “It’s something cultural, psychological, biological, cognitive”. Adam Tooze suggests official efforts to raise Iran’s fertility rate represent a “battle being waged over the future of Iranian society”.

To this point, immigrant economies have had an advantage. In the US, the Brookings Institute suggests “immigration levels are crucial in leading to national growth as opposed to decline, and countering what would otherwise be extreme ageing”. But the difficulty of increasing housing supply appropriately suggests the immigrant economies’ advantages are fading, putting Australia, New Zealand and Canada, among others, on notice.

Raising the economic participation of women to that of men remains the most conspicuous reform to address demographic ageing. But with the demographic drag rising, we also need to run faster just to stand still.

In a striking and widely reported study (including in The Economist), The Child Penalty Atlas, using data covering 134 countries and 95 per cent of the world’s population, reports “pervasive” penalties for having children: “men and women follow parallel trends before parenthood, but diverge sharply and persistently after parenthood”. In wealthy economies, this motherhood penalty explains 80 per cent of the employment gender gap.

In a recent study in Sweden, time out of the workforce is found to be the largest single influence, at 41 per cent, on the gender gap among CEOs. Research from the Federal Reserve Bank of San Francisco suggests policies to reduce the length of work interruptions can have “substantial long-run benefits in the labour market”.

Improved access to affordable childcare and paid parental and sick leave can help. But so can making jobs less “greedy”. In the 1970s sociologist Lewis Coser used the term ‘greedy institutions’ to refer to those that “pressure members to cut ties with other institutions or persons who might make conflicting demands”. Coser originally applied the term to motherhood. Governments can do more to reduce the motherhood penalty, but institutional greediness is pervasive in many of the sectors that offer the most financially rewarding opportunities: finance, medicine, law and even politics and this stifles growth for all affected employees not just mothers.

The (demographic) challenge is stark and the (diversity) solution apparent, but our ability to maintain even the current slow progress may be imperilled.

Political attitudes have historically differed more between generations than between genders. But, the Financial Times reports, “in countries on every continent, an ideological gap has opened up between young men and women”. Young women tend towards being progressive on a broad range of social issues, including gender and immigration, while young men tend to be conservative.

Not everyone agrees. Alternative data sources don’t show the same degree of divergence. But we can identify divergences elsewhere that began as historically unusual and are now entrenched. For instance, the gap in sentiment between consumers with different voting intentions is historically wide, including in Australia and the US.

If confirmed, these trends suggest tomorrow’s leaders may well be more divided around issues of gender than those of today.

Zero-sum economic thinking seems to be playing a role. Alice Evans at Stanford University argues “a wealth of research suggests that economic stagnation fuels … zero-sum mentalities”. A Harvard University study in the US finds “zero-sum thinking can be traced back to the experiences of both the individual and their ancestors, encompassing factors [among others] such as the degree of intergenerational upward mobility they experienced”.

This brings us full circle. Slower growing and ageing populations deliver slower economic growth on average. Slower economic growth foments zero sum thinking.

We need to keep working to win the battle of ideas. We need to run faster.

Richard Yetsenga is Chief Economist at ANZ



IWD: running to stand still
Richard Yetsenga
Chief Economist, ANZ
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