Reducing gender wage inequality increases economic prosperity for all: Insights from Australia

Abstract

This paper extends the debate about redressing persistent gender inequality in Australia by examining the relationship between labour productivity and the wage gap in all states and territories (1986-2013). It is a critical case study as Australia's widening gender wage gap is contrary to other developed nations. Using four different estimation methods, we find that reducing the gap by 10% can boost per capita output up to 3%. To check the robustness of our findings, we also control for the effects of both physical and human capital. Our results suggest there exists a strong business case for eliminating the gender wage gap. Given the tangible benefits to both equity and efficiency, such a goal should be of paramount importance for policy makers.