The Economic Consequences of Gender Inequality

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BBC reports,

Saudi Arabia has issued driving licences to women for the first time in decades just weeks before a ban on female drivers is lifted. Ten women swapped their foreign licences for Saudi ones on Monday in cities across the country…”Expectations are that next week an additional 2,000 women will join the ranks of licensed drivers in the kingdom,” a statement from the Saudi information ministry said. It added that the 10 women who had collected their new Saudi licences had “made history”. “It’s a dream come true that I am about to drive in the kingdom,” Rema Jawdat, who received a licence, was quoted as saying by the ministry. “Driving to me represents having a choice – the choice of independent movement. Now we have that option.” The lifting of the driving ban was announced last September and is part of Crown Prince Mohammed bin Salman’s programme to modernise some aspects of Saudi society.

Saudi Arabia is an extreme case of gender inequality. But what is the economic impact of gender inequality? Here are some major findings from a May 2018 World Bank report:

  • Globally, women account for only 38 percent of human capital wealth versus 62 percent for men. In low- and lower-middle income countries, women account for a third or less of human capital wealth.
  • On a per capita basis, gender inequality in earnings could lead to losses in wealth of $23,620 per person globally. These losses differ between regions and countries because levels of human capital wealth, and thereby losses in wealth due to gender inequality, tend to increase in absolute values with economic development. For these reasons, in absolute terms the losses are largest in OECD countries.
  • Globally, for the 141 countries included in the analysis, the loss in human capital wealth due to gender inequality is estimated at $160.2 trillion if we simply assume that women would earn as much as men. This is about twice the value of GDP globally. Said differently, human capital wealth could increase by 21.7 percent globally, and total wealth by 14.0 percent with gender equality in earnings.

Read the full report here.