Legal Discrimination Stymies Economic Outcomes for Women

Tuesday, November 3, 2020
Graphic of a diverse group of women from around the world

Despite decades of progress in addressing gender discrimination, women across the globe face persistent legal barriers to participating in the economy on an equal basis with men, according to a study co-authored by Yale economist Pinelopi Goldberg.

The study, based on the World Bank Group’s newly compiled “Women, Business and the Law”(WBL) database, provides the first global picture of how discriminatory laws continue to restrict women’s economic opportunities. It documents large and persistent legal gender inequalities, particularly with regards to equal pay and parenting. 

“The amount of legal discrimination our analysis uncovered is surprising, given how far the world has come over the past 50 years,” said Goldberg, the Elihu Professor of Economics in Yale’s Faculty of Arts and Sciences and former chief economist of the World Bank Group. “We hope this research inspires policymakers worldwide to initiate reforms and eliminate legal gender discrimination, which is a necessary first step in expanding economic opportunities for women.”

The WBL dataset measures equality of economic opportunity under the law between men and women in 190 countries from 1970 until today. It covers national laws that affect women’s ability to make a living and provide for their families. Each country was scored in eight categories, measuring laws concerning women’s pay, pensions, marriages, freedom of movement, decisions to find work, and ability to run a business, manage assets, and hold jobs after having children. A maximum score of 100 in a given category indicates that legal rights were equal between women and men.   

Goldberg and co-authors Marie Hyland of the World Bank and Simeon Djankov of the London School of Economics and the Peterson Institute for International Economics found that, on average, women in 2019 had three-quarters of the legal economics rights of men. 

The results varied widely across regions, with the lowest regional average, 49.6, occurring in the Middle East and North Africa. The 37 countries belonging to the Organization for Economic Co-operation and Development (OECD), a forum of democratic nations with free-market economies, rated an average of 94.7 points. Eight countries — Belgium, Canada, Denmark, France, Iceland, Latvia, Luxembourg, and Sweden — earned perfect scores. Sudan and Yemen were among the lowest-ranking countries, each receiving average scores of less than 30 points, according to the analysis. 

Typically, laws related to having children — such as parental-leave policies and getting paid — were the most discriminatory, while those concerning mobility had the lowest levels of gender inequality, the study showed. 

The analysis demonstrated substantial progress in alleviating legal gender discrimination over the past 50 years, with the average global score climbing from 46.48 to 75.23 points between 1970 and 2019; the highest annual rates of reform occurred during the 2000s. The pace of reform varied widely among regions. For example, countries in the Latin American and Caribbean (LAC) region and East Asian and Pacific region (EAP) had similar average scores in 1970 — 49.34 and 48.75, respectively. But the LAC economies have since outpaced their EAP counterparts, scoring 79.18 in 2019, compared to EAP’s 71.30 average score. 

The researchers also found disparities in the pace of reforms across categories. Laws affecting women’s decisions to find employment, including regulations that prohibited women from working in mining and other hazardous occupations, have been reformed at the fastest rate since 1970. By contrast, laws affecting women’s pay have had a much slower pace of reform, despite starting at already-low levels, according to the study. 

These results suggest that policymakers respond to rising labor demand by making it easier for more women to enter the workforce, said Goldberg, who is affiliated with Yale’s Economic Growth Center. 

“Policymakers have been very eager to adopt reforms ensuring that women can work when they need to grow the labor force, but they seem much slower in adopting reforms, such as equal pay protections or publicly provided childcare, that improve the economic wellbeing of working women,” she said. 

While the study and the WBL database say nothing about de facto discrimination — the type that occurs in practice but is not encoded in the law — the researchers found a correlation between legal reforms and positive economic outcomes for women, Goldberg noted.

“This tells us that laws matter,” she said. “They are just one factor in the pursuit of gender equality, and are by no means a cure-all, but they are essential to progress.”

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