Budgeting with Women in Mind

When leaders in developed and developing countries alike ponder ways to boost growth, reduce inequality, and improve living standards, the enduring battle of the sexes is most likely the last thing on their minds. But they might want to think again.

Gender differences have long been incorporated into economic analysis at the microeconomic level in such fields as public finance, labor, and development economics. For instance, different migration patterns for men and women in developing countries from rural to urban areas have long been a staple of models in development economics and contribute to our understanding of the overall development process. But more recently, the focus has turned to the potential macroeconomic implications of gender differences in behavior—both for understanding economic developments and for formulating sensible policies (Grown, Elson, and Cagatay, 2000). Gender differences in behavior that are the outcome of private decisions or reflect the influence of public policies may lead to different outcomes in the macroeconomy, with implications for aggregate consumption, investment, and government spending and, hence, national output. Yet fiscal policies are rarely formulated to take account of gender.

Although much of the work is innovative, the literature is incomplete in two areas. First, it does not always draw out the macroeconomic implications, even when drawing on microeconomic evidence on gender differences in behavior. Second, because it is somewhat disjointed from the broader macroeconomic literature, scholars working in either field often fail to fully recognize each other's contributions. Two recent IMF studies focus on the interaction between gender and macroeconomics and gender and budget processes. This article gives a snapshot of both these topics.