Macroeconomic consequences of gender discrimination: a preliminary approach (refereed paper)

Although the degree of gender wage discrimination has been estimated many times, its effects on the economy have not been too much studied, neither theoretically nor empirically. Consequently, in this paper we attempt to cover the existent void in this topic. First, we establish a theoretically framework of the macroeconomic consequences of gender discrimination and second, we attempt to check these results empirically. The existence of a degree of discrimination means that there is a wage differential in which employer prefer to hire less productive workers instead of discriminated workers. Thus, on one hand, the employment level of discriminated workers would be lower than the neoclassic equilibrium. On the other hand, the cost of producing a unit of product would be higher than the cost of producing without discrimination. As a result, both the product by worker (productivity) and the female employment rate (discriminated group) would be lower. If we aggregate these microeconomic effects we should obtain macroeconomic effects in both productivity and employment. In order to check these effects of discrimination we analyse the correlation in the growth of discrimination and the variables possibly affected: productivity and employment. Using data of gender discrimination for Spanish regions we found a negative and significant relationship between discrimination and productivity. Effects on employment are more difficult to see since the growth of the degree of gender wage discrimination causes a change in the allocation of resources. Thus, we find the effect in the female employment rate relative to men and we do not find it in the female employment rate.