Economic case for gender equality in the EU

A more gender equal EU would have strong, positive GDP impacts growing over time, higher level of employment and productivity and could respond to challenges related to the ageing population in the EU.

GDP Per capita

Gender equality has strong, positive impacts on Gross Domestic Product (GDP) per capita which grow over time.

By 2050, improving gender equality would lead to an increase in EU (GDP) per capita by 6.1 to 9.6%, which amounts to €1.95 to €3.15 trillion.

Compared with labour market and education policies, gender equality policies have a strong impact on GDP. For example, a recent study showed that improvements in educational attainment across EU Member States would lead to a 2.2% increase in EU GDP in 2050 (DG EAC, 2016).

Effect of gender equality on GDP per capita

Increase in GDP per capita (%) 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% -2.0% 2015 2020 2030 2040 2050
  • 2020

    Improvement in GDP per capita between 0.5% and 0.7%

  • 2030

    Improvement in GDP per capita between 1.5% and 2.2%

  • 2040

    Improvement in GDP per capita between 3.4% and 5.2%

  • 2050

    Improvement in GDP per capita between 6.1% and 9.6%

    Improvement in GDP between €1.95 and €3.15 trillion

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Slow progress modelling scenario
  • Closure of gender gap in computing by 2-14 %; closure of gender gap in engineering by 4-12 %
  • 0-13 % reduction in the activity rate gap by 2030
  • 0-5 % reduction in the gender pay gap by 2030
  • 0-5 % increase in fertility rate by 2030
Rapid progress modelling scenario
  • Closure of gender gap in computing by 5-14 %; closure of gender gap in engineering by 9-12 %
  • 0-20 % reduction in the activity rate gap by 2030
  • 0-14 % reduction in the gender pay gap by 2030
  • 0-8 % increase in fertility rate by 2030

Employment

Improvements in gender equality would lead to an additional 10.5 million jobs in 2050, which would benefit both women and men.

About 70% of these jobs would be taken by women, however female and male employment rates meet in the long run, reaching an 80% employment rate by 2050.

New jobs occupied by women are particularly important as they can help to reduce poverty, one of the key priorities of the EU 2020 strategy. Women are generally affected by poverty more often than men because of lower employment and salary prospects. Hence, being in employment lowers the risk for poverty of women (EIGE, 2016).

Effect of gender equality on Employment

Overall employment rate (%) 81% 79% 77% 75% 73% 71% 69% 2015 2020 2030 2040 2050
  • 2020

    EU-28 Total Employment Rate (ages 20-64) increases to between 71.11% and 71.20%

  • 2030

    EU-28 Total Employment Rate (ages 20-64) increases to between 75.54% and 75.84%

  • 2040

    EU-28 Total Employment Rate (ages 20-64) increases to between 77.25% and 77.96%

  • 2050

    EU-28 Total Employment Rate (ages 20-64) increases to between 78.36% and 79.77%

    In 2050, the size of the EU labour force increases by 23 million

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Slow progress modelling scenario
  • Closure of gender gap in computing by 2-14 %; closure of gender gap in engineering by 4-12 %
  • 0-13 % reduction in the activity rate gap by 2030
  • 0-5 % reduction in the gender pay gap by 2030
  • 0-5 % increase in fertility rate by 2030
Rapid progress modelling scenario
  • Closure of gender gap in computing by 5-14 %; closure of gender gap in engineering by 9-12 %
  • 0-20 % reduction in the activity rate gap by 2030
  • 0-14 % reduction in the gender pay gap by 2030
  • 0-8 % increase in fertility rate by 2030

EU Member States

The estimated GDP impacts of increased gender equality vary considerably across Member States, depending on the present level of achievement of gender equality.

Countries with more room to improve gender equality have much to gain. On average, improved gender equality in these countries is expected to lead to an increase in GDP of about 12% by 2050.

The best performing countries in the area of gender equality have already achieved good levels of gender equality and therefore already enjoy some of the associated economic benefits. However, further improvements in gender equality can generate additional economic gains even in these Member States, often reaching around 4% of GDP.

Overall, improved gender equality could boost the long-term competitiveness of the EU economy. By 2050, exports are estimated to increase by about 0.7% whereas imports are forecast to decline by up to 1.2%, leading to an improved balance of trade.

Impact of gender equality in the GDP of EU Member States in 2030

EU map with high, medium and low impact countries.

The Member States have been grouped according to their current level of gender equality in the area of work as measured by the Gender Equality Index published by EIGE.

  • Group 1 comprises the Member States with the lowest levels of gender equality;
  • Group 2 comprises the Member States with medium levels of gender equality; and
  • Group 3 comprises the Member States with the highest levels of gender equality

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How gender equality in STEM education leads to economic growth

Reducing the gender gap in Science, Technology, Engineering and Mathematics (STEM) education areas could help reduce skills gap, increase employment and productivity of women and reduce occupational segregation. Ultimately this would foster economic growth via both higher productivity and increased labour market activity.

However, despite good employment opportunities and highly productive jobs in this area, there is currently a low proportion of women studying and graduating in STEM subjects.

STEM - GDP

Increasing the participation of women in STEM subjects will have a strong positive GDP impact at EU level.

Closing the gender gap in STEM would contribute to an increase in EU GDP per capita by 2.2 to 3.0% in 2050. In monetary terms, closing the STEM gap leads to an improvement in GDP by €610 - €820 billion in 2050.

GDP Impact of closing gender gaps in STEM Education

Increase in GDP per capita (%) 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% -2.0% 2015 2020 2030 2040 2050
  • 2020

    Improvement in GDP per capita between 0.03% and 0.04%

  • 2030

    Improvement in GDP per capita between 0.7% and 0.9%

  • 2040

    Improvement in GDP per capita between 1.6% and 2.1%

  • 2050

    Improvement in GDP per capita between 2.2% and 3%

    Improvement in GDP between €610 and €820 billion

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Slow progress modelling scenario
  • Closure of gender gap in computing by 2-14 %
  • Closure of gender gap in engineering by 4-12 %
Rapid progress modelling scenario
  • Closure of gender gap in computing by 5-14 %;
  • Closure of gender gap in engineering by 9-12 %

STEM – Employment

Closing gender gaps in STEM education would have a positive impact on employment.  Total EU employment would rise by 850,000 to 1,200,000 by 2050. These jobs are forecasted mostly in the long term as employment rates will rise only after more women studying STEM finish their education.

The new jobs are likely to be highly productive because women graduating from STEM often progress into high value added positions in sectors such as information and communication or financial and business services.

Higher productivity of STEM jobs is likely to result into higher wages. Remarkably, the study shows a closure of the gender wage gap by 2050.

Employment Impact of closing gender gaps in STEM Education

Overall employment rate (%) 81% 79% 77% 75% 73% 71% 69% 2015 2020 2030 2040 2050
  • 2020

    EU-28 Total Employment Rate (ages 20-64) increases to between 70.93% and 70.92%

  • 2030

    EU-28 Total Employment Rate (ages 20-64) increases to 74.99% for both scenarios

  • 2040

    EU-28 Total Employment Rate (ages 20-64) increases to between 76.27% and 76.31%

  • 2050

    EU-28 Total Employment Rate (ages 20-64) increases to between 76.52% and 76.64%

    In 2050, the size of the EU labour force increases by 1.2 million

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Slow progress modelling scenario
  • Closure of gender gap in computing by 2-14 %
  • Closure of gender gap in engineering by 4-12 %
Rapid progress modelling scenario
  • Closure of gender gap in computing by 5-14 %;
  • Closure of gender gap in engineering by 9-12 %

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How closing the gender labour market activity and pay gap leads to economic growth

Increasing women’s participation in the work force and closing the pay gap between women and men will have a positive impact on economic growth in the EU. Despite recent improvements, there are still persistent gender gaps in labour market activity and pay, which result in lower employment rates for women, potentially limiting EU growth.

Activity - GDP

Closing the activity rate gap, which refers to the percentage of people who are either working or looking for work, would generate a GDP per capita increase of 3.2 to 5.5% in 2050. This is up to €280 billion increase in GDP by 2030 and €1,490 billion increase in GDP by 2050.

Increase in GDP per capita (%) 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% -2.0% 2015 2020 2030 2040 2050
  • 2020

    Impact on GDP per capita between -0.01% and 0.00%

  • 2030

    Improvement in GDP per capita between 0.8% and 1.5%

  • 2040

    Improvement in GDP per capita between 2.1% and 3.8%

  • 2050

    Improvement in GDP per capita between 3.2% and 5.5%

    Improvement in GDP up to €1.49 trillion

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Slow progress modelling scenario
  • 0-13 % reduction in the activity rate gap by 2030
Rapid progress modelling scenario
  • 0-20 % reduction in the activity rate gap by 2030

Activity - Employment

Closing the activity rate gap, would also lead to a large increase in employment. The study forecasts an increase of 3.5 to 6 million jobs in 2050 as a result of additional women entering the labour force.

Overall employment rate (%) 81% 79% 77% 75% 73% 71% 69% 2015 2020 2030 2040 2050
  • 2020

    EU-28 Total Employment Rate (ages 20-64) increases to between 70.98% and 71.00%

  • 2030

    EU-28 Total Employment Rate (ages 20-64) increases to between 75.43% and 75.70%

  • 2040

    EU-28 Total Employment Rate (ages 20-64) increases to between 76.97% and 77.54%

  • 2050

    EU-28 Total Employment Rate (ages 20-64) increases to between 77.41% and 78.24%

    In 2050, the size of the EU labour force increases by 6 million

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Slow progress modelling scenario
  • 0-13 % reduction in the activity rate gap by 2030
Rapid progress modelling scenario
  • 0-20 % reduction in the activity rate gap by 2030

Pay gap - GDP

GDP effects are much lower when closing the gender pay gap, with a 0-0.2% increase in GDP per capita over the 2030-2050 period.

Closing pay gaps has other positive impacts.  An increase in women’s salaries is likely to lower poverty rates among women and reduce the gender gap in old age pensions (EIGE, 2016). A reduction in the pay gap can also increase women’s confidence and allow them to gain more responsibility at work and progress into leadership positions (Booth 2003).

Increase in GDP per capita (%) 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% -2.0% 2015 2020 2030 2040 2050
  • 2020

    Improvement in GDP per capita between 0.00% and 0.01%

  • 2030

    Improvement in GDP per capita between 0.02% and 0.12%

  • 2040

    Improvement in GDP per capita between 0.02% and 0.07%

  • 2050

    Impact on GDP per capita 0.00% in both scenarios.

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Slow progress modelling scenario
  • 0-5 % reduction in the gender pay gap by 2030
Rapid progress modelling scenario
  • 0-14 % reduction in the gender pay gap by 2030

Pay gap - Activity

Closing the wage gap has rather small effect on the GDP. On the one hand, higher wages encourage more women to enter the labour market, leading to an increase in the productive capacity of the economy and therefore increased employment.

An increase in women’s salaries contributes to reducing the activity rate gap, possibly accounting for part of the positive employment effects associated with improving the labour market activity of women. On the other hand, higher labour costs drive firms to reduce their demand for labour, leading to fewer jobs on offer.  

Overall employment rate (%) 81% 79% 77% 75% 73% 71% 69% 2015 2020 2030 2040 2050
  • 2020

    EU-28 Total Employment Rate (ages 20-64) increases to 70.96% in both scenarios

  • 2030

    EU-28 Total Employment Rate (ages 20-64) increases to between 75.05% and 75.00%

  • 2040

    EU-28 Total Employment Rate (ages 20-64) increases to between 76.20% and 76.13%

  • 2050

    EU-28 Total Employment Rate (ages 20-64) increases to between 76.22% and 76.16%

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Slow progress modelling scenario
  • 0-5 % reduction in the gender pay gap by 2030
Rapid progress modelling scenario
  • 0-14 % reduction in the gender pay gap by 2030

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The outcome of improved gender equality on demographics and labour supply

Improved gender equality measures could also help address demographic challenges for the EU, such as the ageing population. Previous research suggests that gender equality in education, labour market participation and a more balanced sharing of unpaid work between women and men is linked to higher fertility rates, which would lead to a larger population and an increase in long-term labour supply.

This is important in light of current EU demographic projections, which predict a rise in the number of older people out of the labour force.

Demographics - GDP

The impacts of higher fertility rates on GDP per capita are negative initially, as a higher dependency ratio leads to a fall in consumption per capita (despite an overall increase in consumption and GDP).

In the long term (after 2040), there is an increase in the size of the labour force as the new-borns reach working age. At this point, growth in GDP per capita increases rapidly relative to the baseline.

Increase in GDP per capita (%) 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% -2.0% 2015 2020 2030 2040 2050
  • 2020

    Impact on GDP per capita between -0.2% and -0.3%

  • 2030

    Impact on GDP per capita between -0.5% and -0.9%

  • 2040

    Impact on GDP per capita between -0.7% and -1.1%

  • 2050

    Impact on GDP per capita between -0.3% and 0.0%

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Slow progress modelling scenario
  • 0-5 % increase in fertility rate by 2030
Rapid progress modelling scenario
  • 0-8 % increase in fertility rate by 2030

Demographics - Employment

An initial increase in fertility rates generates an increase in consumption, leading to an increase in demand for goods and services which affects positively employment.

Over the 2040-2050 period, the pace of increase in employment is more rapid, as more men and women reach working age. This increases the potential productive capacity of the economy, increases real incomes and, through the multiplier effect, leads to additional increases in economic output and employment.

By 2050, there are an additional 2.5 million people in employment under the rapid progress scenario.

Overall employment rate (%) 81% 79% 77% 75% 73% 71% 69% 2015 2020 2030 2040 2050
  • 2020

    EU-28 Total Employment Rate (ages 20-64) increases to between 71.00% and 71.02%

  • 2030

    EU-28 Total Employment Rate (ages 20-64) increases to between 75.17% and 75.24%

  • 2040

    EU-28 Total Employment Rate (ages 20-64) increases to between 76.37% and 76.52%

  • 2050

    EU-28 Total Employment Rate (ages 20-64) increases to between 76.68% and 77.12%

    In 2050, the size of the EU labour force increases by 2.5 million

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Slow progress modelling scenario
  • 0-5 % increase in fertility rate by 2030
Rapid progress modelling scenario
  • 0-8 % increase in fertility rate by 2030

The EU policy context

The positive impacts of gender equality can be largely attributed to addressing some of the structural weaknesses of the EU economy, identified in the Europe 2020 strategy: employment, productivity and population ageing issues.

To achieve smart, sustainable and inclusive growth the European Union needs to start mainstreaming gender equality now.

Extra Gains

Tackling all gender equalities together is better than tackling them one by one. EIGE’s study shows that gender equality in one domain has spill-over effects in other domains, e.g. more women in STEM studies can lead to improvements in labour market activity rates of women, and an increase in women’s wages.

Fostering a greater participation of women in the labour market and ensuring pay equality is crucial to meet the Europe 2020 target to achieve an overall employment rate of women and men of at least 75% by 2020.

Putting gender equality at the heart of the follow-up strategy of Europe 2020 and other policy reforms would make the economic system more inclusive. It would enable women to fulfil their full potential and benefit everyone in society.

A green tree with stick figures as branches and four combined gears with the words STEM, demographics, wages and activity in each of them.

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About the study

EIGE’s study on the economic impact of gender equality in the EU is unique in the EU context, as it uses a robust econometric model to estimate economic impacts of improved gender equality in several broad areas such as education, labour market activity and wages. It also considers the demographic impact of such improvements.

It’s the first time that a study has attempted econometric modelling of such a broad range of potential impacts of improved gender equality in the EU.

Key methodological steps

The following schematic presents the high level overview of the methodology for the socio-economic modelling of the gender equality scenarios.

  1. Step 1: Choose modeling framework

    • E3ME macroeconomic model
    • Empirical model specifically tailored for analysis in the EU28 Member States
  2. Step 2: Select key pathways

    • Broad literature review to identify key pathways in which gender equality affects the economy
    • Five key pathways selected
  3. Step 3: Model impacts

    • Forecast potential improvements in gender equalitu
    • Econometric modeling of changes in gender equality in the E3ME

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Evidence of economic benefits of gender equality in other policy areas

The research team reviewed the literature in EU Member States and at EU level in order to map and evidence economic impacts of gender equality in different policy areas:

[1] The Tobin Q ratio is calculated as the market value of a company divided by the value of the firm’s assets.

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Study's publications