Articles

Increase wealth taxation and invest in care to close gender pay gap and boost UK's productivity

TLDRoffon

Increase wealth taxation and invest in care to close the UK’s gender pay gap, decrease inequalities and boost the country’s productivity, economists at Greenwich recommend.

Led by Professor Özlem Onaran, the team of economists have developed a series of recommendations to improve gender, income and wealth equality and increase the UK's productivity based on their research.

The team analysed the positive effects of investing in health, education, social care and childcare and the green economy, while also raising taxes on capital income and wealth, and decreasing it on wages. 

The researchers found that an upward convergence of wages – increasing women's hourly wage by two percent and men's by one percent – would help not only to close the gender pay gap but also lead to a higher GDP.

Professor Onaran, Co-director of the Institute of Political Economy, Governance, Finance and Accountability, said: "Our research shows that gender inequalities, poor investment in public infrastructure and the country's low productivity are all linked.  

"By combining our recommended policies, we estimate that in the medium-term, women's employment will increase by an impressive 10 percent, men's by six percent and the public debt, as a ratio to GDP,  would decrease by a massive 10 per cent, while the UK's GDP would increase by 11 percent.

"A progressive taxation policy would allow the government to increase spending on both physical infrastructure and education, childcare, health and social care. The latter are areas where women constitute a large share of the workforce, and where hourly wages are low, or where women care for family members, unpaid. Investing in these areas and employing more teachers, nurses and social care workers, and paying them more, will reverse one of the most persistent dimensions of inequality in our society.

"The UK is both wage-led and gender equality-led – this means the country develops with more equality, not with rising inequality. The UK economy is equality-led. The types of labour market policies we recommend, therefore, include increasing minimum wage, collective bargaining coverage and enforcing equal pay legislation.  

"As well as having a positive impact on employment and being effective in closing the gender pay gap and decreasing income and wealth inequality, our recommendations will also increase the UK's productivity, which will benefit the whole country. It is a win win for social, ecological and economic sustainability."

Professor Onaran will be presenting the policy mix and the team's research, which has been funded by the Rebuilding Economics, ESRC Network+, at 'The macroeconomic effects of income, wealth and gender inequalities and policies' conference on 14 October at the University of Greenwich.

The conference will include speakers from the International Labour Organization, The Organisation for Economic Co-operation and Development, the Women's Budget Group, and the National Institute of Economic and Social Research/Rebuilding Macroeconomics. For more information about the event, visit: https://www.gre.ac.uk/business/research/centres/gperc/news/events.

To read the full Policy Brief, 'A policy mix for equitable sustainable development in the UK: the effects of gender equality, wages, wealth concentration and fiscal policy' click here.

The report 'The effects of gender inequality, wages, wealth concentration and fiscal policy on macroeconomic performance' by Özlem Onaran, Cem Oyvat and Eurydice Fotopoulou, is available here.