The Unassuming Economist

From a new IMF Working Paper:

“How important are female workers for economic growth? This paper presents empirical evidence that an increase in female labor force participation is positively associated with labor productivity growth. Using panel data for 10 Canadian provinces over 1990–2015, we found that a 1 percentage point increase in the labor force participation among women with high educational attainment would raise Canada’s overall labor productivity growth by 0.2 to 0.3 percentage point a year. This suggests that if the current gap of 7 percentage points between male and female labor force participation with high educational attainment were eliminated, the level of real GDP could be about 4 percent higher today. The government has appropriately stepped up its efforts to improve gender equality, as part of its growth strategy. In particular, the government’s plan to expand access to affordable child care is a positive step. However, we argue that to maximize the policy outcome given a budget constraint, provision of subsidized child care—including publicly funded child care spaces—should be better targeted to working parents.”

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A new IMF report says that “Over the past decade or so, Brazil—a still highly unequal country—has been the poster child for social mobility. According to the World Bank’s international poverty line, Brazil slashed poverty from 25 percent of the population in 2004 to 8.5 percent in 2014. Extreme poverty declined from 12 to 4 percent over the same period. As millions were lifted out of poverty, the middle class was boosted. The commonly used inequality measure – the World Bank’s Gini coefficient (the closer to 1, the more unequal) – declined from 0.60 in 1990 to 0.51 in 2014. Inequality reduction was achieved thanks to a decade-long period of economic growth and deliberate income and social inclusion policies, such as minimum wage increases and targeted social programs. Yet, inequality remains high: based on data from the 2014 Pesquisa National de Amostra de Domicílios (PNAD), labor income of the population in the top decile of the income distribution corresponds to 40 percent of labor income of all Brazilian families, the top 1 per cent receives about 12 percent, and the top 0.1 per cent around 2.5 percent. Half percent of all labor income is concentrated in the top 0.01 percent.”

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From a new IMF report:

“Rwanda has been one of the fastest growing economies in sub-Saharan Africa, and emerged as a global leader in promoting gender equality. Over the past ten years, economic growth has averaged 7.7 percent, with per capita income close to doubling to $729 in 2016. Between 2004 and 2014, the poverty rate declined by almost 18 percentage points to 39 percent while extreme poverty declined to 16 percent.

Rwanda’s advances in gender equality emerged, in part, as a necessary component of the rebuilding and development strategy from the mid-1990s, with women taking on new roles as major actors in society and heads of households. Today, the role of Rwandan Women is celebrated, as evident in many aspects elaborated further in this paper. Gender equality as an integral component of its development agenda—with advocacy at the highest level, constant engagement in programs to enhance economic opportunities for women, home-grown solutions to address gender inequality, an enabling legal framework and supporting institutions—such as a dedicated gender “machinery”: the Ministry of Gender and Family Promotion, the Gender Monitoring Office, the National Women Council, and the Forum for Women Parliamentarians. The provision of gender disaggregated data has increased (NISR 2016: National Gender Statistics Report), and allows a timely assessment of the main indicators.

In parallel, indicators of gender equality have improved significantly (Figure 4), and the World Economic Forum’s 2016 Gender Gap Index ranks Rwanda number 1 among all low-and-middle-income countries in closing the gender gap. Rwanda also positioned itself as number 5 worldwide, and one of only five countries to have ever reached a score of more than 80 out 100. Globally, Rwanda also ranks second in the UN’s 2015 Gender Development Index and has the lowest level of gender inequality, as measured by the Gender Inequality Index in sub-Saharan Africa.”

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From a new IMF report:

“Inclusive growth is a priority that resonates globally today. It relates to a broad sharing of the benefits of, and the opportunities for, economic growth, and reflects growth that is robust and broad-based across sectors, promotes productive employment across the labor force, embodies equal opportunities in access to markets and resources, and protects the vulnerable.

The G20 has emphasized the need for inclusive growth. In this regard, the Hangzhou G20 leaders’ Summit in September 2016 renewed the emphasis on inclusive growth called for the forging of both a narrative for strong, sustainable, balanced and inclusive growth and for adopting a package of policies to make this possible. The communique stated that the G20 would “work to ensure that our economic growth serves the needs of everyone and benefits all countries and all people including in particular women, youth and disadvantaged groups, generating more quality jobs, addressing inequalities and eradicating poverty so that no one is left behind.” G20 Ministers returned to this in March 2017 in Baden-Baden noting that: “We reiterate our determination to use all policy tools––monetary, fiscal and structural––individually and collectively to achieve our goal of strong, sustainable, balanced and inclusive growth, while enhancing economic and financial resilience.”

Economic growth and inequality, the two sides of inclusion, have a complex nexus that can generate tradeoffs. Growth is the basis for generating inclusion. Across countries, growth has been instrumental in narrowing income gaps; within countries, growth has reduced poverty and made possible higher living standards and job opportunities. But policies driven by an exclusive growth focus can also set back inclusion in certain circumstances. While some inequality is integral to a market economy, high and persistent inequality can undermine the sustainability of growth itself.”

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The latest update of the International Jobs Report shows that: “The global unemployment rate is expected to remain stable this year at about 5.7 percent and then decline in the coming years. The total number of people unemployed around the globe will remain at about 175 million this year. Unemployment rates are expected to decline in most advanced economies, but expected to be higher this year (compared to last year) in many emerging markets. Venezuela’s unemployment rate is expected to increase by 4 percentage points between 2016 and 2017, with smaller increases expected in Algeria, Brazil, South Africa and Turkey.”Continue reading here.