Costs of gender inequality - An economic analyis

Abstract

Gender-based inequality is a phenomenon observed to a greater or lesser extent all over the world. In this thesis, we investigate the interplay between gender-based inequalityand economic performance. First, we compare and synthesize different approaches inmodelling the effect of gender-based discrimination on economic performance, applyingan overlapping generations (OLG) framework. Since gender-based discrimination as well as its consequences are multidimensional, we analyze how gender-based inequality can be measured and what the crucial mechanisms in the models are. The thesis provides a literature review of the models in order to offer a comprehensive understanding of the feedback mechanism among female empowerment, economic development and the variable that measures gender inequality. We find that female empowerment, both within the private and the public sphere, has a positive effect on the economic development by stimulating human capital accumulation. Second, the practical application of the reviewed models is demonstrated by setting up a simple OLG bargaining model on the issue. The aim is to is to understand key features in modelling the interplay of gender inequality and economic growth. The model is analyzed analytically as well as numerically via simulations.We show that female empowerment leads to higher investments in education and lowers fertility. Finally, we compare our model and the models presented in the literature review, considering the effectiveness and performance. The thesis concludes with a discussion of the results and a summary of the implications of female empowerment for the economy.