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The Economic Consequences of Sex

VANCOUVER – Until recently, there has been very little analysis of women’s role in the economy. Two centuries ago, Mary Wollstonecraft published her proto-feminist A Vindication of the Rights of Women, and in 1869 John Stuart Mill, inspired by his wife Harriet, wrote The Subjection of Women in support of female suffrage. But new evidence is emerging of the cultural barriers to women’s economic advancement, which must be addressed if the world is ever to attain its goal of gender equality.

Early contributions to the economics of gender focused on the division of labor within households. Ideas drawn from trade theory – such as specialization and comparative advantage – were used to explain why in the developed world men tended to work outside of the home and women within it.

This division of labor had important ramifications for women. As the Nobel laureate economist Gary Becker proposed in A Treatise on the Family, it influenced who would gain an education and develop professional skills. Technological changes that lightened the burden of housework, coupled with changing attitudes toward women in the workplace, now allow many more women to acquire an education and the relevant skills to pursue careers. Indeed, in the United States, there are now more women than men studying at universities.

Why, then, do gender differences in economic outcomes persist? Economists have recently identified a fundamental reason in a phenomenon that remains pervasive: the gap in autonomy (or bargaining power) between women and men. The immediate effects of autonomy (or lack thereof) are felt within the household – for example, in how the family budget is spent – and this is determined largely by how well either partner is likely to fare should the relationship end.