female financial empowerment: a challenge for society (and academia)

The “quest” for Gender Equality normally revolves around the goal of equity between men and women, disregarding any possible argument in favor of efficiency. Nevertheless, many academic studies in the field of economics are now drawing their attention to the numerous potential gains that a higher female participation in the labor force may bring.

Many more studies have shown that the current allocation of women within (and outside) the labor market is, in most cases, suboptimal. This segregation happens for many reasons, among which are gender norms and preferences, but mostly because female workers face higher barriers to entry and smaller returns to investment, due to a lower (perceived) bargaining power.

Research

A recent piece of research that is really significant in that regard, is a paper by Nava Ashraf (LSE), Alexia Delfino (Bocconi) and Ed Glaeser (Harvard) analyzing female entrepreneurial activity within urban markets in Lusaka, Zambia. More specifically, they see that women tend to be relegated in female-dominated sectors such as food services, retail, and cosmetics/salons, which are normally less profitable than male-dominated ones. Why is that the case?

Previous studies had centered their arguments around specialization, differences in training across genders, and an overall preference of women for factors such as working hours flexibility, the possibility of working from home, and so on. Ashraf, Delfino, and Glaeser instead, focus on another source of female disadvantage to entrepreneurship: according to their findings, women may fear expropriation in male-dominated sectors and are therefore more willing to work with other women, rather than with men as colleagues – or even worse, competitors.

Think for a moment about the framework in which the study is conducted. Zambia, along with many other African countries, has been hit in the most recent decades by a rapid wave of urbanization. This has inevitably increased the need for trust, but also the difficulty of achieving it. In such context, the inability to trade without fear of expropriation disproportionately affects women, and the combination of weak rule of law and male advantages in bargaining could greatly hinder female economic activity.

Market Chiefs

Something that is particularly worth mentioning about this research is the peculiar role of so-called “market chiefs”. Market chiefs – who can either be appointed or elected – play the role of regulating bodies in the societal pyramid of Zambia, and their main task is to settle disputes among marketeers or with clients. In fact, Ashraf, Delfino, and Glaeser are able to prove, through a “trust-based experiment”, the existence of a positive correlation between the presence of market chiefs (which in a more complex society would be substituted by properly developed institutions) and investment made by female business owners in profitable industries. Indeed, it seems that if women know that some kind of authority will eventually stand for them within a dispute, they will also be incentivized to aim for more rewarding jobs, in spite of male competition and predominance.

Some might argue that these findings are not applicable to a more modern and advanced society, where institutions are already in place and supposedly grant equal treatment to men and women. And yet, empirical data suggest that this might not be the case.

For instance, economist Simone Schaer conducted an experiment in 2011, whereby women were randomly assigned ATM cards which were supposed to lower their withdrawal costs and provide an incentive to consume more. However, results showed that many of the sampled individuals actually used their accounts less, due to the fear that their husbands could take the money and spend it for themselves. This revealed the existence of an intra-household constraint that can be particularly stringent and penalizing for women, and the need for economic research to “account for these set of constraints which women face in their respective contexts when establishing the conditions for women to flourish and contribute to overall economic growth” (Duflo, 2012).

Conclusion

This kind of study calls for a new set of tools – or at least, approaches – that should be designed specifically in order to investigate the role of women in the labor market, how to foster their participation, and the subsequent contribution to society as a whole.