Traditional models of growth and development are built upon the subjugation and unequal gendered opportunities presented to Women around the world – wage disparities, inequality in getting opportunities, and lack of recognition for social help and advancements

Feminist and Mainstream Perspectives on Inequality and Macroeconomics

Distinct differences in the approaches of feminist and mainstream economists have emerged in the burgeoning research on the interrelationship of inequality and growth. Contrasting views are apparent at the outset as evidenced in the framing of the inequality problem. We consider first the perspective of mainstream economics that underlies the influential policy documents of the World Bank, including the 2006 World Development Report (hereafter WDR2006) evaluated by Diane Elson (Citation2009) in this volume. This perspective, which is also embodied in standard economics textbooks and thinking, does not fully reflect the growing sophistication of mainstream economics, but it does have a heavy influence in policy and the market reforms spearheaded by the World Bank and the International Monetary Fund (IMF) in developing economies.

The mainstream perspective emphasizes equality of opportunity, in the sense of formal, legal equality but is reluctant to promote equality of outcomes based on the argument that it would undermine efficiency. As Elson's (Citation2009) textual analysis of WDR2006 indicates, the mainstream perspective argues that promoting equality of opportunity can achieve economic efficiency (or “prosperity,” as it is put throughout WDR 2006). Inequality of opportunity, in turn, is linked to poorly functioning markets that must be fixed by fostering greater competition. This approach has led to policy prescriptions that privilege market competition through liberalization and privatization. The notion of competition underlying the WDR2006 and similar documents envisions an idealized society of small producers as the economic agents who will spur economic growth, a far cry from actual economies in which unequal bargaining power between corporations and wage workers abounds. Moreover, the mainstream concept of competition does not recognize the social embeddedness of markets and that their operation reproduces the power inequalities and social norms that are inscribed within these institutions.

Further underlying the mainstream perspective is a vision of modernization that sees inequality as a holdover of past unequal opportunities (see, for example, James R. Kluegel and Eliot R. Smith 2007). As Elson (Citation2009) describes, the WDR2006 reflects a particularly narrow variant of this notion: inequality is a characteristic of traditional (preindustrial) societies where concentration of power creates self-reinforcing “inequality traps,” a term frequently used in the WDR 2006. And the locus of gender inequality, according to the WDR2006, is rural South Asia and inequalities between men and women in the ownership of assets. Thus, the WDR2006 does not view gender inequality as a feature of industrial societies or high-growth East Asian economies.Footnote6 Moreover, despite widely accepted microeconomic analysis in which women's unpaid labor constrains their labor market participation and contributes to occupational segregation and gender wage inequality, the WDR2006 gives scant attention to both labor market inequality and women's burden of unpaid labor.Footnote7 Consistent with the mainstream perspective, however, WDR2006 views removing legal barriers to women's participation in labor markets and access to land rights as sufficient for achieving gender equity.Footnote8

In contrast to the mainstream perspective, most feminist economists seek equality of outcomes, broadly understood to encompass occupations, activities, and resources, including income and assets. We see equality of opportunity and equality of outcomes as closely related, such that systemic inequality in outcomes contributes to unequal power and, as a result, unequal opportunities.Footnote9 Likewise, promoting equal opportunity will not be sufficient to ensure equality of outcomes, given the disadvantages that may arise from past history and present social arrangements. Market processes, far from alleviating the inequality problem, can exacerbate it. Gender norms are embedded in labor markets, and fostering competition can perpetuate gender inequality. For example, when women enter the labor market, they are often paid less than men on the assumption that they are dependent on men. Assigning men the role of breadwinner also provides a rationale for hiring men into jobs with upward mobility. Women, in turn, are slotted into low-wage, insecure jobs considered to be fitting for their assumed role as secondary wage earner. Further, in the absence of policy to address women's unpaid housework and caring responsibilities or paid work arrangements that accommodate caring labor, competition in labor markets is stacked against women who have difficulty maintaining labor force attachment levels equal to those of men. These barriers, in turn, lead to persistent gender disparities in occupational outcomes and wages.

Feminist economists' analyses of the interrelationship between inequality, development, and growth underscore that the macroeconomy provides the structural conditions under which equality is sought. In addition, gendered assumptions are embedded in models that guide macroeconomic policies. In this framework, individuals seek to provision for themselves and their families in the context of the macroeconomy. No matter how hard individuals work, how many sacrifices they make, and how much schooling they seek for themselves and their children, their families' ability to provision will depend on the structure and functioning of the aggregate economy. Macroeconomic events can present hurdles for individuals and families in a number of contexts, including a recession; a structural change and thus a mismatch between the individual's skills and those in demand in labor markets; international agreements that have opened a country to trade competition and financial volatility, leading to instability in prices, interest rates, asset prices, and exchange rates, with consequent effects on employment; and liberalization of foreign direct investment (FDI) that gives employers the potential to bargain down wages. These examples indicate that the macroeconomy acts as a structure of constraint in the achievement of broadly shared well-being and may contribute to inequality.

Further, the macroeconomy is itself a gendered structure, as evidenced by differences in women's and men's employment distribution and reservation wages, the latter due to variations in responsibility for unpaid caring labor. In addition, erroneous or unrealistic gendered assumptions are embedded in models that guide macroeconomic policies (for example, assumptions that men are breadwinners and that labor is an unreproduced commodity), and as a result, those policies can worsen gender equality.

This understanding provides the framework for a large body of feminist economics research that critiques market-oriented policies for generating inequality and setbacks in achieving development. These policies, adopted en masse by developing and industrialized economies since the early 1980s, have accelerated their integration into the international economy and reduced government regulation over the domestic economy. Macroeconomic stabilization policies have sought to reduce inflation, budget deficits, and balance-of-payments deficits through restrictive monetary and fiscal policies and currency devaluation. Longer-term reforms in the area of trade liberalization, capital account liberalization, deregulation of government controls, and the privatization of public services and state-owned enterprises have become key components of structural adjustment programs. These stabilization policies and reforms have subsequently become normalized as “sound” macroeconomic policies.

A series of financial crises in East Asia, South America, and Russia, and most recently the global financial crisis that started in 2008, have brought widespread critique in policy and scholarly circles of the neoliberal policy agenda, with calls for a new international financial architecture and a move away from unfettered deregulation and liberalization (Barry Eichengreen Citation1999; Narcis Serra and Joseph Stiglitz 2008). Yet well before this clamor for change, feminist economists had critiqued the mainstream policy agenda for its uneven distributional consequences across gender, ethnicity, and class (Lourdes Benería and Shelley Feldman 1992; Pamela Sparr Citation1994; Nilüfer Çağatay, Diane Elson, and Caren Grown 1995). Feminist economists have argued that the deflationary bias and the commodification bias of these macroeconomic policies result in entitlement failures for low-income groups and more generally domestic groups that are not internationally mobile (Elson and Çağatay Citation2000). Budget cuts in basic public services along with privatization of these services and social protection increase livelihood insecurity and shift the burden of social reproduction onto these groups. Women in low-income groups, in particular, have to not only search for paid work in economies that generate, at best, weak employment growth but also put in more time and effort to provision with non-market substitutes to make ends meet. Further, the costs of increased vulnerability to global financial crises brought on by financial liberalization are borne by the same domestically locked-in groups who are least able to bear them. Thus, low inflation targets, budget surpluses, and efficiency are achieved by shifting costs and risks away from financial interests and wealthy domestic groups. Feminist economists have not only questioned the soundness of these macroeconomic policies but also made theoretical contributions to macroeconomic theories that recognize the implications of inequality (Berik and Rodgers 2008). We discuss our interpretations of this literature and this volume's contributions in the following two sections.