The impact of the gender wage gap on the Australian economy during 1990-2008

The persistence of the gender wage gap in Australia and overseas has been the subject of much research. However, few if any studies, and none for Australia, provide a comprehensive and detailed account of the impact of the gender wage gap to economic growth. This paper seeks to provide such an account. Using growth modelling techniques based on 1990-2008 data, we find that the gender wage gap has a substantial effect on Australia’s economic performance, measured in terms of GDP per capita, and that the value of reducing the gap is substantial. A decrease in the gender wage gap of 1 percentage point from 17 per cent to 16 per cent is expected to increase GDP per capita by 0.5 per cent of total GDP, assuming that the Australian population is held constant. The results also indicate that eliminating the whole gender wage gap from 17 per cent to zero, could be worth around $93 billion or 8.5 per cent of GDP.