March 06, 2018

Trillion dollar cost of the gender pay gap to OECD economies

Trillion dollar cost of the gender pay gap to OECD economies

Paying women less than their male counterparts may be holding back the growth of OECD economies.

Substantial gender wage differentials exist in countries at very different levels of economic development, and women are greatly underrepresented in leadership positions in political institutions and firms,” writes Mario Macis in his IZA World of Labor article.

The gender wage gap varies across the OECD which has an average of 16%. Korea has the biggest gender pay disparity of 37% compared to Sweden where the difference is 13%. Luxembourg has the greatest wage equality of just 4%.

According to new research by PricewaterhouseCoopers (PwC), reducing the gender pay gap across OECD countries to match that of Sweden could boost gross domestic product by $6 trillion. The gains would come from increased female participation in the labor market, entrepreneurship, and women moving into higher-paid and skilled jobs.

On the topic of the benefits of high-potential female entrepreneurship, Siri A. Terjesen writes, “Female-led ventures that are market-expanding, export-oriented, and innovative contribute substantially to local and national economic development, as well as to the female entrepreneur’s economic welfare.”

PwC say the pay gap could be reduced through greater flexibility for working women as well as higher government spending on family benefits to encourage mothers to return to work, and measures such as shared parental leave. It also finds that countries with a higher number of female employers tend to have a smaller level of disparity.

Macis observes that, “In India, evidence indicates that female leaders implemented policies that benefited other women, and also created role models that influenced young women’s education and career aspirations and decisions.”

Read further articles on the gender divide at work and female labor force participation.