A new report by Moody’s Analytics highlights the potential economic gains from closing the gender pay gap. The study suggests that narrowing the wage differential between men and women could boost the global economy by about $7 trillion or 7%. Moody’s estimates that it could take up to 132 years to close the economic gender gap based on current trends. However, more women joining the labor force, taking on managerial and professional roles and increasing productivity could help reduce this gap.
The report emphasizes the importance of reducing the wage gap in emerging markets, such as India, which could further raise economic potential. The calculations are based on the wage increments that women in the OECD countries between the ages of 25 and 64 would receive if they were paid the same as their male counterparts of the same age range in 2021. This alone could raise the potential output in the OECD by nearly 10% and global output by 6.2%.
The study identifies several root causes of the gender wage gap, including “family responsibilities carried by women” and a lack of similar network connections. Women are also “less likely” to ask for promotions while being held to higher standards than men, the report states. Moody’s suggests that policies such as providing affordable childcare, flexible working conditions and paid paternity and paternity leave could help shift social norms in the right direction.
Moody’s Analytics also highlights the consistent “underskilling” of women, resulting from their underrepresentation in middle and senior management roles, despite exceeding the number of men holding a master’s degree or equivalent in OECD countries. This trend could lead to “economic loss at the individual and macroeconomic levels,” resulting in limited progress in elevating women over the past decade. The authors stress that women tend to land in lower-level and lower-paid positions, employed below their skill level, despite making a higher upfront investment in education.
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