Women (Still) Hold Up Half the Sky

August 16, 2023

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Goldman Sachs Research published their first paper on Women Hold up Half the Sky in 2008. At the time, they regarded the old Chinese proverb as more aspiration than fact, given the gender gaps they found in education, health, work and wages in both developed and developing countries alike.

Fast forward 15 years – because gender equity has become especially important in this era of aging demographics, our Research colleagues decided to take a fresh look at these issues.

In most countries today, the working age population is shrinking and even for the few countries where it is not shrinking yet, growth rates are declining. In the US, working age population growth has been slowing for decades and is expected to continue its decline until we hit negative growth around mid-century.

At the same time, geopolitical risks and public policy (including the recent Inflation Reduction Act) are increasingly pushing our companies to reshore and bring production home. This means it’s now more important than ever to utilize the full resources women have to offer.

Are we doing that? Since Research’s original report, more women have entered the workforce and their pay had edged closer to that of men. However, progress has been slow and there is still some way to go to close the gaps.

According to our Research colleagues, even just halving the pay and employment gap between men and women could raise the level of GDP (gross domestic product) across developed and developing nations by 5-6%.

Progress is slow but steady

There has been plenty of global progress for women over the past 15 years – especially in education and labor force participation – but there are still persistent gaps.

The education of women and girls has improved, with 50% of women in emerging markets now having an upper secondary education, up from about 20% in the early 2000s.
Globally, women have seen a slow but steady rise of about 6% in labor force participation over the past 15 years, although overall participation of women remains lower than men. In the US, the Department of Labor puts the percentages at 57.4% for women and 68.0% for men.
In addition to more women joining the labor force, the gender pay gap has edged slightly lower across many economies, including the US.
Women are slowly moving into more positions of leadership in politics and business but continue to be under-represented. Representation at the very top remains elusive but has improved – just 1% of Europe/US CEOs were women in 2008 compared with around 8% today.

The path forward to gender equality

Each economy around the world has its own distinctive cultural backdrop and set of needs. But once governments have done their part to ensure equal rights between men and women (such as outlawing discrimination and granting the right to divorce and access to credit), the rest of the job of closing the gender gap is likely in the hands of policymakers, corporations and investors. Our colleagues in Research noted several areas of focus that could bring improvements:

Education is all-important. Women’s labor participation hasn't risen when adjusted for the level of education. Women with a higher level of education are both more likely to work and likely to earn more when they are employed. Plus they typically spend this increased income on their families, enhancing their children's educational attainment, health and welfare, and providing a secondary boost to growth.
Family-friendly policies include maternity and paternity leave, as well as subsidized childcare. All these policies are associated, although loosely, with higher female labor force participation.
Pay gaps are still substantial and largely unexplained. The UK requires pay gap disclosures, which could explain, in part, why the UK pay gap has fallen more than those of most developed nations. However, at least some of the pay gap is likely due to different choices by men and women in terms of the type of jobs done and/or total hours worked. It is equality of opportunity that matters rather than equality of outcomes.
The corporate leadership pipeline needs to be addressed: It’s important to focus on creating opportunities at all levels. There has been a sharp rise in the share of women sitting on company boards, especially in Europe, where this metric has been a particular focus. The change has been dramatic, but there hasn’t been a comparable rise in the number of women in other leadership roles: neither further down the business hierarchy at the management level nor further up at the executive director, CFO or CEO level.

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