From Gender as an Exogenous Variable to Gender as an Endogenous Force in the New Mainstream Economics
from Irene Staveren
I will present a paper at ‘The New Economics as Mainstream Economics’ conference (Cambridge, 28-29 January 2010), titled: From Gender as an Exogenous or Impact Variable to Gender as an Endogenous Force in the New Economics. In the paper I argue that in the old mainstream macroeconomics, gender is often completely absent, either as a variable, or as driving certain institutions, or as underlying the gender division of labour between the paid and unpaid economy, whereas the unpaid economy is often completely ignored in macroeconomic analyses. At most, gender is included as exogenous through a sex disaggregated variable such as male and female labour force participation. Gender must be understood as, first, shaping market processes in terms of access to and control over resources, such as education or incomes, second, as shaping people’s choices, for example in segmented labour markets with typically feminine and masculine jobs, third, as being inherently part of macroeconomic trends, for example through fluctuations in the female labour force participation rate, and forth underlying the household gender division of labour leading to a large female intensive unpaid economy.
In heterodox economics, particularly feminist economics, but also strands of structuralist economics, social economics and institutional economics, gender has increasingly been recognized as endogenous to the economic process. This implies that not only there are economic impacts that are often different – unequal – for men and women, but also that existing gender relations have an impact on the economy, either positive or negative. And, that these two directions of the relationships between the economy and gender mutually influence each other, directly as well indirectly through various feedback effects.
Existing gender inequalities are often reinforced by gender-blind economic policies whereas they may in themselves limit the effectiveness of economic policies and make economic analysis incomplete when ignored. The literature shows various examples of inefficiencies of gender inequalities and ineffectiveness of macroeconomic policies when such gender inequalities are ignored. First, distortions in the allocation of credit or fertilizer or labour generate inefficiencies because women’s return on loans tend to be higher than men’s, as well as their pay-back rates, and yields of household farms in Africa increase with a simple redistribution of fertilizer and male labour from male to female plots. Second, countries that will not meet the 2015 Millennium Development Goal on equal school enrolment of boys and girls have been estimated to miss between 0.1 and 0.3 points GDP growth. Third, when countries use the gender wage gap as a competitive advantage in order to keep the price of their export manufactures low, existing gender inequalities in labour markets are re-inforced which will keep female labour productivity low and keeps low income countries trapped into low road development. This will also keep the terms of trade of developing countries vis-à-vis the North at a disadvantage, which shows there is an important gender dimension to the Prebisch-Singer hypothesis on the low terms of trade of developing countries. Fourth, the low agricultural supply response in sub-Saharan Africa to currency devaluations appears partly to arise from the control of males in farming households over cash crop earnings, which provides female farmers a disincentive to shift her labour from food crops to cash crop production. Fifth, export strategies based on low labour costs lead to higher job vulnerability for women as compared to men: they gain more jobs but they also loose them faster than men. Sixth, the neoclassical assumption that more competition leads to less labour market discrimination has been proven wrong, since firms will either make jobs more flexible and informal, which results in hiring more women but at lower wages, or firms will replace female unskilled labour by male skilled labour. Seventh, trade agreements between the North and the South are between unequals, which appears to have a gender dimension to it. When women are forced to shift to the more vulnerable import competing sector and men protect their employment in the non-tradable sector or a stable export sector (such as agriculture in Mercosur), women’s employment becomes more vulnerable. Eighth, deflationary policies tend to raise the cost of borrowing for small scale entrepreneurs – where women are often concentrated – and the accompanying reductions in public expenditure tend to increase women’s unpaid workload.
In conclusion, new economic thinking can only emerge when it is inclusive economic thinking, which implies a far deeper understanding of how gender inequality affects economic processes. This requires far more contextualized economic analysis, even at the macro level, so that positive and negative relationships between gender inequalities on the one hand and economic inefficiencies on the other hand are taken into account in the study of trade, fiscal and monetary policy, and growth strategies.