Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/322543 
Year of Publication: 
2025
Series/Report no.: 
Bruegel Working Paper No. 02/2025
Publisher: 
Bruegel, Brussels
Abstract: 
Most macroeconomic and growth accounting models assume that male and female workers are perfectly substitutable in the aggregate production function. Whether this assumption is valid is an empirical question that this paper aims to answer by estimating the elasticity of substitution between female and male labour. We apply linear and non-linear techniques to firm-level data, cross-country sectoral data and cross-country aggregate data. We find that women and men are far from being perfect substitutes in production, a result that is consistent with much microeconomic evidence, but has not permeated to macroeconomics. The failure to account for imperfect gender substitutability has far-reaching implications. In particular, standard growth accounting exercises are likely to attribute to technological progress gains that are more properly attributable to the impact of greater gender inclusiveness in the labour force over time. Put differently, the gains from gender inclusiveness are likely to be much larger than standard economic models estimate.
Subjects: 
Female labour force participation
gender inclusion
aggregate productionfunction
elasticity of substitution
growth
inequality
employment
JEL: 
O47
J24
Document Type: 
Working Paper
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