This chapter looks beyond gender differences in labour market participation to gender differences in productivity and earnings across different sectors and jobs. It shows that, despite significant progress in female labour force participation over the past 25 years, pervasive and ongoing gender differences remain in productivity and earnings. It argues that the interaction of employment segregation by gender with gender differences in time use and access to inputs, and with market and institutional failures, traps women in low-paying jobs and low-productivity businesses. Breaking out of this productivity trap requires interventions that lift women’s time constraints, increase their access to productive inputs, and correct market and institutional failures.
Men’s and women’s jobs differ greatly, across sectors, industries, occupations, types of jobs and types of firms. While these differences evolve with economic development, the resulting changes in the structure of employment are not enough to eliminate employment segregation by gender. All over the world, women are concentrated in low-productivity, low-paying jobs. They work in small farms and run small firms, they are over-represented among unpaid workers and in the informal sector, and they rarely rise to positions of power.
While differences in worker characteristics (especially in human capital) and returns matter, it is primarily differences in jobs that account for the gender gaps in productivity and earnings. Three main factors lead to gender segregation in access to economic opportunities among farmers, entrepreneurs, and wage workers: gender differences in time use (primarily resulting from differences in care responsibilities), gender differences in access to productive inputs (particularly land and credit), and gender differences stemming from market and institutional failures:
- Women bear a disproportionate share of house and care responsibilities and consequently face important fixed costs associated with market work: fixed schedules and minimum hour requirements, and the difficulty in adjusting responsibilities at home.
- Social norms around the role of women also influence these trade-offs. Women are more likely to supply fewer hours of market work than men, putting them at risk of being channelled into lower-quality jobs.
- Female farmers and entrepreneurs have less access to land and credit than men. This is due to barriers to market access, including discrimination and differential pricing in land and credit markets, and institutional constraints, including land rights and financial rules and regulations.
- Discrimination within households favours men in the allocation of productive resources, which translates into gender differences in scale of production, productivity, and investment and growth capacity.
- Women’s limited presence in certain markets may create barriers to knowledge and learning about women’s performance, which reinforces women’s lack of access to these markets.
- The design and functioning of institutions may be (intentionally or unintentionally) biased against women in ways that perpetuate existing inequalities.
Global aging implies that fewer workers will be supporting a growing population of the elderly in the decades to come, unless labour force participation increases significantly among groups with low rates today—basically, women. Successful interventions will depend on adequately identifying and targeting the most binding constraint in each context, while acknowledging the problem of multiple constraints, perhaps by sequencing policies.
