Proxies for Income – How Do They Measure Gender Inequality?

Throughout history, men and women have had very different access to economic, social, and political opportunities. This disparity has skewed the distribution of assets, income, and power between men and women, and is at the heart of gender inequality. Gender inequality limits the life chances of individuals and families, and has a profound impact on economies, societies, and the environment.

In countries around the world, the gap between the earnings of women and men is closing – but not fast enough. Every day, more than 150 million girls are denied their right to education and end up in poor households with limited opportunities for financial security and health. Gender inequality is also fuelling child labour, gang violence and recruitment to armed groups. The most effective way to tackle these challenges is by investing in girls’ education – which can reduce poverty, fight climate change, and boost economic growth.

The evidence is clear: gender equality benefits everyone. In countries that have closed the gender gap, economic development has been faster and more inclusive. And achieving equality in the workplace, education, and household chores will allow men and women to make better choices about work, families, and what they want from their lives.

In recent years, many mainstream economists have refocused their attention on the causes of gender inequality. The consensus is that biological differences are not the main driver – rather, gender inequality is due to path dependent social norms that influence preferences and behavior. Those norms are shaped by the institutions that people build and are reinforced by culture.

A key challenge is how to measure those institutions, especially in the developing world where gender inequality is often hidden or unmeasured. One approach is to use a “proxy for income” – a simple measure of disposable income that covers household spending on food, housing, and education. Using this proxy, researchers have found that gender inequality in household income is linked to the number of children and the size of the household – both factors that can be measured in surveys.

It is important to note, however, that proxies for income do not necessarily reflect the overall distribution of wealth within a society. For example, in many developing countries, richer households are less likely to own land than the average household.

As a result, it is possible that the path dependence of some social institutions may remain unchanged even as the overall distribution of household wealth changes over time. Despite the fact that these institutions may be embedded in society, there is still room for progress. Several studies show convergence (or at least the halting of divergence) across countries on indicators like educational attainment, labor market participation, and longevity.