This indicator measures the government’s commitment to promoting gender equality by providing women and men with the same legal ability to interact with the private and public sector.
Relationship to Growth & Poverty Reduction
Studies show that legally sanctioned gender inequality has a significant negative impact on a country’s economic growth because it prevents a large portion the population from fully participating in the economy, thus lowering the average ability of the workforce. 1 When one gender receives fewer legal rights, both the country’s potential labor force and potential pool of entrepreneurs decreases. When women are excluded from “male” jobs in the formal sector, an overcrowding occurs in the “female” informal job sector. This leads to a depression of wages for an otherwise productive group of workers. 2 Research shows that when women have access to employment, investment in children’s health, nutrition, and education often increases, promoting higher levels of human capital. 3
Current Methodology for FY 2018
This indicator combines 20 different assessments comparing women’s legal capacity to that of men. When conducting the assessments it is assumed that women have reached the legal age of majority; are sane, competent, in good health, and without a criminal record; and where married, are involved in a monogamous relationship. The legal capacity to execute 10 economic activities is examined: get a job, register a business, sign a contract, open a bank account, choose where to live, get passports, travel domestically and abroad, pass on citizenship to their children, and become heads of households. For the purposes of this indicator, women have the same capacity as men if they are legally able to perform these activities in the same way as men. Women are considered to have less capacity to act if they are not legally able to perform these activities in the same way as men.
Special note: new methodology to be used from FY 2019 forward
The Gender in the Economy indicator will be updated starting in FY 2019 by including additional questions from Women, Business, and the Law, providing a more robust assessment of the issue.
While the current Gender in the Economy indicator uses data from the “Accessing Institutions” section of Women, Business and the Law, the new indicator will add data from the “Using Property,” “Getting a Job,” “Going to Court,” and “Protecting Women from Violence” sections. The indicator will look at whether women have the same legal rights and necessary protections to participate in a wider range of economic activities than the current version, namely: constitutional protection of nondiscrimination, getting a job, registering a business, signing a contract, opening a bank account, choosing where to live, getting national IDs, travelling domestically and abroad, passing on citizenship to their children, becoming heads of households, managing family finances, administering marital property, valuation of marital contributions, ownership rights to property, inheriting from parents, inheriting from spouses, testimony’s evidentiary weight, working night hours, working the same jobs as men, domestic violence legislation, specialized domestic violence court, sexual harassment legislation, legal age of marriage, exceptions to age of marriage, explicit prohibition of child marriage, and penalties for child marriage.
These additional areas of assessment to be included from FY 2019 have been added because of their clear link to growth and poverty reduction:
- Using Property: Owning and having an equal say in their use of property not only increases women’s financial security, but is also associated with their increased bargaining power within the household. 4
- Getting a Job: Restrictions on working hours, sectors, and occupations limit the range of jobs that women can hold and this can lead to occupational segregation and confinement of women to low-paying sectors and activities. 5 Many jobs prohibited for women are in highly paid industries, having real implications on their earning potential.
- Going to Court: A women’s testimonial parity increases equality before the law and protects them in case of legal challenges to contracts and other matters of economic importance where they must give testimony to prove their case. 6
- Protecting Women from Violence: Violence can undermine women’s economic empowerment by preventing employment and blocking access to other financial resources. 7 Research shows the earnings of women in formal wage work who are exposed to severe partner violence are significantly lower than women who do not experience such violence. 8 Similarly, due to the typically large age differences between girls younger than 18 and their husbands, child brides lack bargaining power in the marriage and have less say over their activities and choices, including education and economic activity. 9 Child marriage–through reduced decision-making power, greater likelihood of school dropout and illiteracy, lower labor force participation and earnings, and less control over productive household assets—severely impedes the economic opportunities of young women. 10
While the new version of the indicator will be used formally only from FY 2019, an annex will be provided in the FY 2018 scorebook to show how countries will perform under this new approach.