Gender equality boosts economic growth
A newly-developed version of Cambridge Econometrics’ world-leading macroeconomic model provided a key element of a unique study commissioned by The European Institute for Gender Equality.
The study launched last week finds that if the EU stepped up its efforts to improve gender equality, more jobs would be created, GDP per capita would increase and society would be able to adjust better to the challenges related to the ageing population.
Coinciding with International Women’s Day last week the report by ICF, Cambridge Econometrics (CE) and Collegio Carlo Alberto, presents evidence on the macroeconomic and social benefits that enhanced gender equality provides for EU Member States and the EU as a whole.
The study is unique in the EU context, because it uses a robust econometric model (E3ME) to estimate socio-economic outcomes of improving gender equality in several broad areas including education, labour market participation, wages and work-life balance. For the purpose of this project, a new version of the E3ME model was developed, which includes new equation sets for employment and wages disaggregated by gender.
Hector Pollitt, Director at Cambridge Econometrics said: “CE’s macroeconomic model E3ME has demonstrated its adaptability in this ground-breaking study. Having developed new equation sets specifically for this sector we have successfully customised the model for our client. As a result we are confident that CE could help deliver further studies in the area of gender equality. As is common for CE, this piece of work was delivered to the client by an international team, with partners at ICF and Collegio Carlo Alberto.”
The evidence confirms that improvements to gender equality would generate up to 10.5 million additional jobs by 2050 and the EU employment rate would reach almost 80%. EU Gross Domestic Product (GDP) per capita would also be positively affected and could increase up to nearly 10% by 2050 compared to baseline.
The level of economic benefits varies considerably across Member States, with some individual countries seeing around a 4% GDP increase compared to baseline and others exceeding 10%. Countries with more room to improve their current level of gender equality have much to gain.
The study also explored what the economic impacts would be if gender inequalities were reduced in STEM (Science, Technology, Engineering and Mathematics) education, labour market activity and pay. It considered the demographic changes when these gender gaps are reduced.
No previous study has attempted econometric modelling of such a broad range of macroeconomic benefits of gender equality in the EU.
“Equality between women and men is one of the EU’s fundamental values. It is about fairness. Now numbers talk: equality is a driver for economic growth. Gender equality will bring more growth to Europe”, said Vera Jourová, Commissioner for Justice, Consumers and Gender Equality.
About the European Institute for Gender Equality (EIGE)
The European Institute for Gender Equality (EIGE) works to promote and ensure equal opportunities for women and men across Europe and beyond. EIGE’s research paves the way for greater understanding and awareness of gender equality in all areas of society. By highlighting the progress still to be made and providing reliable, practical information, EIGE supports policymakers to improve the lives of women and men and so bring Europe closer to gender equality
“Our study proves that gender equality is good for the economy and it cannot be disregarded if the EU wants to achieve sustainable and inclusive growth. For far too long, gender inequalities have been limiting women’s economic opportunities and we now have proof that gender equality is crucial for the entire economy”, said Virginija Langbakk, EIGE’s director.
For more information about CE’s contribution to this study please contact Unnada Chewpreecha, Project Manager at Cambridge Econometrics: [email protected]