The Unassuming Economist

From the IMF’s latest report on Senegal:

“For Senegal to meet its goal of reaching emerging market status by 2035, reforms should address development challenges, including gender inequality. Gender inequality is associated with lower economic growth (IMF 2015, Hakura and others 2016; Gonzales and others 2015), higher income inequality (Gonzales and others 2015, IMF 2016), lower economic diversification (Kazandjian and others 2016), and less bank stability (Sahay and others 2017), while it worsens other development indicators.

Senegal still has large gender gaps in both education access and labor opportunities. Authorities should improve incentives for girls to continue their studies, by diminishing indirect costs of studying (such as those in transportation and in school supplies); enforcing civil laws and campaigning against child marriage and early pregnancy; targeting areas with higher gender gaps (especially rural areas); and reducing discrimination in the labor market (thus increasing the financial returns from studying). To improve outcomes in the labor market, authorities should address gender gaps in access to assets, especially credit and land, and employment segregation.

Net costs of policies can be mitigated through an enlargement of the formal sector and an improvement of spending efficiency. As shown in the model simulations, increasing average years of education to 5, combined with increasing the formal sector share of GDP by 10 percentage points can boost government tax revenues to more than cover the costs, generating a net surplus for the government budget. Furthermore, improving education spending efficiency (for instance as pointed out by the experiments in Senegal by Carneiro and others, 2016) would reduce the government’s overall cost of education.

Mixed policies are necessary to tackle all sources of macro-critical gender inequalities. The framework presented is a valuable tool to show how gender gaps should be tackled from different angles simultaneously to end gender gaps in economic opportunities. For instance, although higher expected returns from labor expands female labor force participation (as seen in Figure 6), it is difficult to close the participation gap entirely if policies to address family costs for women to work outside the house (such as those in Table 1) are not implemented. Similarly, wage gaps cannot be closed if authorities address education gaps but ignore gaps in the labor market.”