Sunday, February 3, 2013

Gender discrimination is holding back development, but not just in poor countries

Gender inequality has been getting a lot of attention lately in the development literature as a factor that reinforces poverty dynamics. Esther Duflo provides a good summary of the complex interaction between gender inequality and under-development in this paper [PDF]. I was glad to see the concluding communique from the Post-Millenium Development Goals high level panel meeting in Monrovia [PDF] putting gender equality issues up front in their recommendations for action on global development.

But several articles over the past week have reinforced for me the idea that gender inequality has also been a big factor in holding back economic prosperity in the rich world. An article in the Irish Times (headline: "I told the interviewer I wasn't planning on having more children. I got the job") highlighted the level of job-market discrimination being faced by young women - particularly those in the so-called goldilocks years for having kids - in Ireland today. This is apparently a result of employers trying to avoid taking on the "liability" of maternity leave. This story is echoed in Italy, which has the third lowest female employment rate in the OECD, according to this article from Friday's Guardian. The current economic circumstances in these countries doesn't help, with employers being able to pick and choose between numerous candidates for any advertised job. But the problem originates in the unequal treatment of men and women in parental leave legislation and the inadequate provision of childcare. Of course, there is some biological justification for the differing treatment of men and women in relation to parental leave. But not enough to justify a system - backed by unequal legal entitlements - that creates the expectation that a woman who has a child will be off work for six months or more, while a man might miss a few days.

Friends of mine who live in Oslo and recently had a baby, explained to me that the system there allows parents to choose how they divide parental leave between them. But the system also incentivises fathers to take time off by extending the total amount of parental leave for couples who both avail of it. This means the expectation at work is that both men and women will take leave if they have children, reducing the motivation for employers to discriminate against women.

Greater gender equality in the form of higher female participation in the workforce has dual economic benefits. Higher participation rates provide the mechanistic boost to prosperity of simply shifting the ratio of workers to overall population in favour of the former. More importantly, the exclusion of women from the workforce deprives the economy of the contributions of many of its most talented members. While unpaid work in the home is inherently valuable, society as a whole benefits when families can choose who engages in that work and how much time they devote to it. I'm putting the focus here on the economic benefits, taking as given that greater gender equality is a worthy and important goal in itself. There are also, presumably, social benefits to greater gender equality, not just for women, but also for fathers and their children, who would benefit from the opportunity to spend more time together.

A special report in The Economist this week praised the Nordic countries (Sweden, Denmark, Finland and Norway) for consistently topping world rankings in both competitiveness and well-being. While the report notes the exceptionally high rates of female labour force participation in these countries, it gives relatively little attention to the systems that underpin that level of inclusion, choosing instead to focus on reductions in the size of government and Sweden's introduction of private sector competition and vouchers in its education sector (elements of the Nordics' success that The Economist is predictably keen on).

The Economist is right to point out that some of the cultural and institutional factors on which the Nordic success is built will be difficult for others to replicate. One element of that success that should be relatively straightforward for others to imitate is to legislate for greater equality between the sexes when it comes to parental leave entitlements, and to provide both women and men the basic freedom to decide for themselves how best to share their work and home life commitments.

Friday, February 1, 2013

Teaching Economics

This week I reviewed Meme Wars: The Creative Destruction of Neoclassical Economics (edited by Kalle Lasn and Adbusters) for the LSE Review of Books. (You can read the full review here). Meme Wars styles itself as an alternative ‘Econ 101′ textbook and the core of the book is a collection of short essays that question the ideas and teaching of mainstream, neoclassical economics. Its radical approach (in both design and content) might be off-putting to some, but I'd recommend it - both for experienced economists, as a challenge to think more broadly about underlying assumptions and fundamental questions about the purpose of the discipline - and especially for those who are new to economics, as an introduction to some alternative ways of thinking about the economy. 

While many of the criticisms raised here are already gaining traction within the discipline, for example through the emerging paradigms of ecological, behavioural and complexity economics, Meme Wars is right in complaining that these developments are generally not reflected in the economics taught to undergraduate students. A recent paper (available here) that tracks changes in the content of the bestselling introductory economics textbooks since the onset of the global financial crisis, would appear to confirm this view, i.e. little has changed.

However, that is not to say that 'mainstream' voices in economics are not willing to challenge the status quo. Meme Wars contains contributions from the likes of Joe Stiglitz and George Akerlof, among others. I also recently came across a collection of essays titled What's the Use of Economics? Teaching the Dismal Science After the Crisis edited by Diane Coyle (see here for details), which includes contributions from numerous established names in economics.

The currents of change and debate within economics make this an exciting time to be a part of the discipline. It would be a shame not to share this excitement with those being introduced to the subject for the first time.