Gender Gaps Closing but Not at the Same Speed Globally
Business cycle downturns affect women and men differently. Historically, in major economies, recessions have tended to disproportionately impact men since they tend to dominate employment in the cyclical industries of the economy. During these cyclical downturns, women have tended to step in and cushion the shock to household income. However, these dynamics are changing as women narrow the gap with men in many measures of economic participation and as traditional social mores evolve in some parts of the world. Broadly speaking, gender gaps are closing across most countries, but not necessarily at the same speed.
United States: Rise of the American Woman
In the U.S., women have suffered a fairly anemic labor market recovery as they dominate employment in the housing sector and in local governments, two of the most depressed sectors. However, the longer term outlook for females is significantly more positive than that data imply. With their higher levels of education relative to men, women are well positioned for the jobs of the 21st century and will tend to enjoy stronger earnings growth relative to men. In the U.S., the investment implications of our analysis are relatively straightforward. Women already make so many of the spending decisions in households to begin with, and after downturns women may have more control over household finances as they contribute an increased share income. For the equity investor with a core holding in consumer discretionary stocks, screening for companies that cater to women seems like a sensible proposition.
Global: One Size Does Not Fit All
The global economy mirrors some of the gender patterns exhibited in the U.S. We look specifically at Europe and developing economies. In Europe, the education trend suggests that women are better prepared for the evolution of the job market. On average, women are formally higher qualified than men, with females on average having three more years of education. In the least developed non-OECD economies, however, women have lagged the most behind men in terms of education, health and access to income-generating activities, and are therefore more vulnerable to recessions.
Policymakers Face a Complicated Balancing Act
Policymakers are faced with a complicated balancing act when addressing gender issues and the workplace. For women in the U.S. and parts of Europe, the issue is not so much developing skills that are attractive to today’s employers, but rather moving women ahead when they are employed. In many emerging markets, policies aimed at reducing educational gaps between boys and girls and creating incentives that will enable women to have access to the labor market are policies that can go a long way toward improving gender equity.