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Gender Equality: The Right and Smart Thing to Do for Poverty Reduction in Central America

December 8, 2011

World Bank study analyzes women’s economic opportunities in Central America

SAN SALVADOR, December 8, 2011 – “A revolution in the making,” that’s how a new World Bank study describes progress made in gender equality in Central America in recent years. The study analyzes the evolving economic role of women over the last decade in the economies of Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua and Panama, and finds that, in spite of low labor force participation, women’s contribution to the economy has grown considerably in the region.

“A quick review of recent trends in Central America reveals three contradicting gender trends”, says Renos Vakis, Senior Economist at the Poverty, Gender and Equity unit for Latin America at The World Bank, and team leader of the study. “On one hand, only 40 percent of working age women is in the labor force in Central America; and yet, women contribute more than ever to the economy: 30 percent of family income in Central America is earned by women, a trend that has grown significantly over the last decade. Even more impressive, for the first time, women earn more than men in Central America”.

The report "Una (R)evolución en marcha: ampliación de las oportunidades económicas para las mujeres en América Central" identifies three main reasons for these trends:

  • Education gains have opened more possibilities in the labor market for women. Gender gaps in education closed by 2006 and in most countries in the region women have surpassed men in education attainment.
  • Family structure dynamics, such as lower fertility rates and increasing female-headed households have shifted women's constraints and preferences vis-à-vis labor market participation.
  • Changes in attitudes and social norms in the region, such as improvements in attitudes and values towards female workers, may have had an impact on relative wages and labor opportunities for women.

The study shows that poor women have benefited the most.  While poor women in Honduras and Nicaragua have experienced faster reductions in gender gaps in earnings; poor women in El Salvador and Panama have caught up with men in both labor force participation and earnings. Guatemala remains the only exception, with poor women experiencing reductions in labor force participation and lower earnings.

Yet, gains could have been larger. The report points to remaining obstacles to women‘s ability to participate in economic activity due to the limited dynamism in labor market and weak labor demand derived from Central America’s modest growth over the ten year period analyzed. Among these obstacles are women’s concentration in industries that are less productive or profitable, as well as a limited job creation overall.

“The poverty reduction potential of reducing barriers for women to participate in the labor market could be key to the region,” pointed Felipe Jaramillo, World Bank Director for Central America. “If female labor force in Central America was at the levels of countries with similar economic development, up to two million people would leave poverty in the region.”

Where can governments or policy makers go from here? The report identifies potential areas for policy intervention:

  • Active labor market policies, especially those that reduce barriers of entry into the labor market such as the combination of skills development and job placement services. Similarly, childcare availability in all its modalities -from public to subsidized- will reduce women's time constraints and conciliation problems. Finally, micro-finance schemes targeting poor female entrepreneurs will have an impact into alleviating credit constraints, and are more effective when combined with training to improve business-related skills.
  • Policies that change intra-household resource allocations by putting money in the hands of women; including programs such as conditional cash transfers.
  • Programs that facilitate social interactions through increased communication among female beneficiaries, leaders and community members can have large impacts. Such interactions can promote knowledge exchange and behavioral and attitude changes, which can in turn translate into better economic outcomes.

The study calls also for further research on region-specific characteristics. “New phenomena such as increased female migration that has an impact on how resources and responsibilities are allocated in households should be studied more closely to assess its implications on policy” said Fabrizio Zarcone, World Bank Resident Representative for El Salvador. 

Central America is a region known for its plethora of new small scale initiatives and interventions by non-governmental organizations and other civil society groups. More systematic evaluation of these initiatives to understand what works and what doesn’t work, can point to ways of improving women’s access to economic opportunities in the region.

Media Contacts
In Washington D.C
Marcela Sanchez-Bender
In Central America
Cesar Leon
Tel : (502) 2329-8000