A demographic dividend is the accelerated economic growth that may result from a decline in a country’s birth and death rates and the subsequent change in the age structure of the population, whereby the ratio of working-age people to the number of dependents (children and the elderly) increases. Investments in family planning and education can lead to lowered fertility and thus the changing age structure that creates the potential for a demographic dividend. Further investments in education, governance, and infrastructure increase the chances of realizing that potential to move a whole economy to a higher growth path.
The concept of a gender dividend has recently entered into the broader demographic dividend discussion. While the demographic dividend comes from shifting age structures toward more productive ages, gender dividends come from taking steps that increase the volume of market (paid) work and the level of productivity of the female population.
The gender dividend suggests that economies could be more productive and equitable by closing gender gaps in the labor market. A key factor in these labor market gender gaps is the fact that women tend to perform the bulk of unpaid dependent care and household work. These are substantial time burdens for women in comparison to men, and may prevent women from seeking better opportunities in the labor market. What is more, measuring this unpaid burden can provide additional insight into how much it prevents women from seeking more work in the paid labor market.
Creating a Gender Dividend
Specifically, a gender dividend is the increased economic growth that could be realized with investments in women and girls. A gender dividend can flow from lower fertility rates, which lessen women’s burden of caring for dependents and free up time for other productive activities, notably formal employment.
Investments in the human capital of women and girls may thus have multiple beneficial effects: They contribute to lower fertility and population age structures shifting toward more productive ages, and may then have an additional effect of increasing women’s time for market work and raise their market productivity as well.
The gender dividend was a key theme at a hosted panel on Women’s Economic Empowerment and Sustainable Development held earlier this year by the Population Reference Bureau, the World Bank, and the Population and Poverty Research Initiative (PopPov). The panel was held in conjunction with the 60th session of the United Nations Commission on the Status of Women (CSW60) in New York. Panelists shared evidence on CSW60’s primary theme of women’s empowerment and sustainable development.1 Gretchen Donehower of the University of California, Berkeley, and project director of Counting Women’s Work, shared her work on the gender dividend, summarized below.
Boosting Women’s Participation in the Paid Labor Force
Investments in women and girls have improved compared to previous generations and continue to be a priority strategy for development. Donehower links these investments to the demographic dividend. She explains how investments in women and girls help lead to lower fertility rates, a key to realizing a demographic dividend. In addition, once these more educated cohorts of women reach working ages, they have the potential to achieve higher levels of labor force participation and higher wages than their mothers’ generation. These shifts in women’s labor force participation rates and wages would constitute a gender dividend, resulting in a more productive economy.
Demographic events, such as childbearing and aging, and associated responsibilities such as child- and elder-care, may lead women in many countries to seek paid work opportunities that allow for shorter hours and more flexibility to attend to responsibilities in the home, but these types of jobs are likely to come with a significant wage penalty for that flexibility. Policies that encourage affordable market-based dependent care or that support women to continue their education and delay a first birth can boost labor force participation and higher wages for women.
With adequate policies in place to reduce gender gaps in market labor force participation and wages, Donehower projects that a gender dividend could emerge (see Figure).2 This gender dividend would be reflected through increases in the support ratio—the ratio of producers to consumers in the economy—over time. When there are more working-age individuals (producers) than those who depend on them (consumers), an opportunity for increased saving and faster economic growth arises. More women in paid formal work will increase the support ratio.
In the figure, the green bars show how the support ratio will change due to projected changes in the working-age population over time. Over the next few decades, then, most of the countries shown will have fewer producers relative to consumers because of projected population aging. The blue bars show how the support ratio might change if in addition to changing age structure, gender gaps in market labor income were reduced by half by the year 2050. In this scenario, most of the countries shown become much more productive over this time period, demonstrating the potential of gender dividends to counteract the expected productivity declines due to population aging.
Counting Women’s Unpaid Work Provides Perspective
Women’s market economic activity drives this estimate of the gender dividend, but Donehower notes that it only tells part of the story. The current definition of economic activity leaves much of women’s work uncounted. When looking at hours of paid work, goods produced, and related activities over the life span (market production), men spend more time than women in the market; but when looking at hours spent on unpaid dependent care and housework (household production), women spend a higher number of hours on these activities than men do. Household production, however, is not captured as work in most economic indicators, leaving childcare, elder care, and other unpaid housework out of policy-influencing calculations like gross domestic product, despite the fact that this unpaid work adds value to an economy.
Donehower reasons that a broader definition of economic activity is necessary in order to help policymakers understand how household responsibilities may represent a barrier to women’s participation in market economies, and change some of the policy implications drawn from economic analyses. She also notes that adding unpaid dependent care and housework (household production) to valuations of labor income can provide a more comprehensive and equitable approach to measuring the overall hours of work that men and women perform. It allows us to see the full picture of an economy’s production and consumption.
Some reduction in gender gaps in labor force participation and wages may happen automatically with lower fertility, because women presumably have more time available when they do not have the burden of caring for children. They may choose to use this additional time to work in the labor force. However, much of the gender dividend may not be realized without suitable employment availability, shifts in social norms, institutional support, and family-friendly policies, such as a flexible work environment and paternity leave.
Investments in reproductive health, education, and women’s empowerment can reduce fertility, contribute to the well-being of girls and women, and lead to increased economic growth. Reassessing how economies measure and value contributions to household production is another important component of achieving gender equality and empowering women and girls, because it recognizes their full economic contribution and gives us powerful analytical tools to understand how the household and market economy interact.
The author wishes to thank Gretchen Donehower of the University of California at Berkeley for her significant comments and contributions to this web article.
To calculate the support ratio for each year, current age profiles of labor income and consumption from each country are weighted by that country’s projected population from the United Nations World Population Prospects database and their ratio calculated. The green bars show the rate of change in the support ratio over time if the age profiles remain unchanged over the projection period. The blue bars show the same ratio, but for the hypothetical case that the gender gap in labor income, which includes gaps in labor force participation and wages, closes at the same rate each year from 2014 to 2050, such that the labor income gender gap at each age is 50 percent smaller in 2050 than it was in 2014.