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Are women politicians good for economic growth?

There has been a phenomenal global increase in the proportion of women in politics in the last two decades. We find that constituencies that elect women experience significantly higher growth in economic activity through the electoral term than similar constituencies that elect men.

More than a hundred countries have introduced quotas for women in parliament or in party lists in the last two decades (Besley et al. 2013; Dahlerup 2006). The percentage of women in parliament worldwide has more than doubled in the last twenty years, standing at 22.8 percent in June 2016. The feminization of politics is one of the most exciting political phenomena of our time. Yet, we do not know what it portends for growth, the rising tide that is thought to lift all boats.

The study: Women legislators and economic performance

In a recent research paper, we use comprehensive data from India to conduct the first systematic examination of whether women politicians are good for economic growth (Baskaran et al. 2018). The association of women with redistributive politics and a tolerance of higher taxes (Edlund et al. 2002, 2005; Campbell 2004) makes it plausible that, at least in the short to medium term, women politicians are less effective than men at promoting growth. We examine data for 4265 state assembly constituencies for 1992—2012 during which time most states had four elections.

Two factors probably contribute to the scarcity of causal evidence on the relationship between legislator gender and economic performance. First, constituency level data on economic activity are not available in most countries. We use satellite imagery of night luminosity as a measure of economic performance, following earlier multi-country evidence that this is a good proxy (Henderson et al 2012, Chen et al 2011). We verify that it is closely correlated with GDP at the state level, and then map it to the constituency level. The second constraint on research seeking to produce causal evidence is that constituencies in which women win elections will tend to be systematically different in ways that may be correlated with economic performance.

To isolate the role of legislator gender from voter preferences, we use a statistical approach called the regression discontinuity design on a sample of close elections between men and women (Lee 2008). This relies on the fact that India has first-past-the-post elections in which `the winner takes all’, so that if one candidate has just one vote more than the other, they win. Close elections are defined as elections in which the vote margin between the winner and the runner up is small. We remove from the analysis sample all constituencies in which women do not contest. We then effectively compare constituencies in which a woman won against a man by a narrow margin (`treated’) with those in which a man won against a woman by a narrow margin (`control’). Subject to validity checks (that we conduct), this research strategy can be argued to isolate the causal influence of leader gender. In other words, our results emerge from a thought experiment that asks how economic growth in a constituency would change if a male leader were replaced by a female leader, with everything else being the same. We examine data for 4265 assembly constituencies for 1992-2012, during which time most states had four elections.

Findings:

  1. Economic growth

Women legislators in India raise economic performance in their constituencies by about 1.8 percentage points per year more than male legislators. Given that average growth in India during the sample period was about 7%, our estimates indicate that the growth premium for constituencies stemming from their having a female legislator is about 25%.

We were concerned that this may have been at the cost of growth in neighbouring male-led constituencies, in which case the economy as a whole may not be better off. However we tested this and found no evidence of reduced growth in neighbouring male-led constituencies. We can therefore conclude that electing women legislators contributes to economy-wide growth.

To understand the mechanisms underlying this striking finding, we explored differences between male and female legislators in corruption, efficiency and motivation, each of which has been associated with economic growth in developing countries. We found evidence in favour of women in each case.

  1. Corruption

Male legislators in the analysis sample are about three times as likely as female legislators to have criminal charges pending against them when they stand for election, and we estimate that this can explain about one fourth of the difference in growth between male and female-led constituencies. We buttress this result with estimates of actual corruption in office following Fisman et al 2014. We find that the rate at which women accumulate assets while in office is 10 percentage points lower per annum than among men. These findings line up with experimental evidence that women are more fair, risk-averse and less likely to engage in criminal and other risky behaviour than men (Andreoni et al 2001; Eckel and Grossman 2008; Fletschner et al 2010).

  1. Infrastructure

Since economic infrastructure is an important input to economic growth, especially in developing countries (Jacoby 2000), we analyse legislator performance in implementation of a massive federally-funded village road construction program (PMGSY). We find that male and female politicians are equally likely to negotiate federal projects for road building in their constituencies. However, women are more likely to oversee completion of these projects. The share of incomplete road projects is 22 percentage points lower in female-led constituencies. We interpret this as a marker of efficacy. Since road construction has higher returns for men (Asher and Novosad16), this also establishes that women politicians are not exclusively focused upon serving the interests of women voters, a commonly held claim.

  1. Electoral uncertainty

Finally, separating the sample into swing and other constituencies, we find that women legislators only perform better than men in non-swing constituencies. In other words, in swing constituencies where their continued electoral success is more uncertain (so electoral incentives are sharper), elected men appear to exert more effort to improve economic growth. One rationalization of this result is that men exhibit political opportunism while women display more intrinsic motivation. Previous studies have argued that women tend disproportionately to sort into occupations driven by mission more than profit, but we are unaware of a similar result in the political domain.

Policy implications

A historic constitutional amendment proposing to reserve one third of all federal and state assembly seats for women was passed by the upper house of the federal parliament in India in 2010. However, this bill still needs to pass the national parliament and state assemblies. Our findings are of acute relevance to this impasse. Our findings are of interest beyond India, given the scarcity of evidence on the question of how legislator gender is associated with economic performance.

We find some evidence that the gender gap in legislator performance is smaller in the more developed states of India, and in the sample of constituencies in which the legislator has a college education. In both cases, there is a smaller gender gap in criminality and corruption. Thus, even if gender differences in tendencies towards corruption are intrinsic, if opportunities for corruption decline with development, women may be especially effective relative to men at producing growth in less developed countries. On the other hand, to the extent that women are intrinsically more motivated in public-facing occupations such as politics, they may outperform men in many environments.

References

Ahern, K. and Dittmar, A. (2012). “The Changing of the Boards: The Impact on Firm Valuation of Mandated Female Board Representation”, The Quarterly Journal of Economics (2012) 127 (1): 137-197.

Asher, S. and Novosad, P. (2016). Market Access and Structural Transformation: Evidence from Rural Roads in India.

Baskaran, T, S Bhalotra, B Min, Y Uppal (2018), ‘Women Legislators and Economic Performance’, IZA Discussion Paper 11596, Institute of Labor Economics, Bonn.

Besley, T. J., Folke, O., Persson, T. and Rincke, J. (2013). “Gender quotas and the crisis of the mediocre man: Theory and evidence from Sweden”, IFN Working Paper No. 985, American Economic Review. Accessible: http://eprints.lse.ac.uk/69193/1/Besley_Gender%20quotas_2017.pdf

Bhalotra, S. and Clots-Figueras, I. (2014). “Health and political agency of women”, American Economic Journal: Economic Policy, 6, 164-197.

Clots-Figueras, I. (2012). “Are female leaders good for education? Evidence from India”, American Economic Journal: Applied Economics, 4, 212-244.

Edlund, L., Haider, L. and Pande, R. (2005). “Unmarried Parenthood and Redistributive Politics”, The Journal of the European Economic Association, vol. 3, no. 1 (January), pp. 95-119.

Fisman, R., Schulz, F. and Vig, V. (2014). “Private Returns to Public Office”, Journal of Political Economy. 122(4), pp. 806–862.

Gagliadurci, S. and Paserman, D. (2015). The Effect of Female Leadership on Establishment and Employee Outcomes: Evidence from Linked Employer-Employee Data, Research in Labor Economics, 41, 341-372.

Henderson, J. V., Storeygard, A. and Weil, D. N. (2012). “Measuring economic growth from outer space”, American Economic Review, 102(2), 994-1028.

Jacoby, H. G. (2000). “Access to Markets and the Benefits of Rural Roads”, The Economic Journal, 110 (465), 713-737.

Mauro, P. (1995). “Corruption and growth”, Quarterly Journal of Economics, 110 (3), 681-712.

Miller, G. (2007). “Women’s suffrage, political responsiveness, and child survival in American history”, Quarterly Journal of Economics, 123, 1287-1327.

Pande, R. and Ford, D. (2012). Gender Quotas and Female Leadership: A Review, Background paper, the World Development Report on Gender.

Prakash, N., Rockmore, M. and Uppal, Y. (2014). Do criminally accused politicians affect economic outcomes?, Mimeo, University of Connecticut.

 

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