The Lingering Face of Gender Inequality in Latin America

Latin America has always had high levels of inequality, and today, in spite of recent improvements, it is still the second most unequal region in the world, just below sub-Saharan Africa.

Latin American studies agree that the main cause of increasing inequality in the region has been the process whereby political power, wealth and income have become concentrated in the hands of landowning and capitalist elites and of the people who control work and trade relations (Bértola and Ocampo 2012).

In the First Globalization period inequality in Latin America increased, and while the gap was not as wide as in other regions at that time like Africa and Asia it was still too great to enable these Hispanic countries to catch up with the developed world.

In the industrialization period (1930–1980), Latin American social development indicators had higher growth rates than at any other time in the region’s history, although the improvement was more marked in some countries than others.

There was also an improvement in equity levels in the countries that managed to develop welfare state systems such as Argentina, Chile and Uruguay. However, other countries had high levels of inequality either because there were big differences in the composition of the population (indigenous people, peasants, descendants of slaves) or because their labour markets were strongly segmented with gaps between formal and informal workers that highlighted the differences in state regulation.

Starting in the 1970s, the levels of equity that had been attained previously began to diminish. This was due to the drastic deregulation of labour markets, increasing segmentation in job markets, a widening gap between the skilled and the unskilled workforce, along with an industrialization slowdown, less state participation and a cutback on policies to redistribute wealth.

Many authors consider that the persistence of inequality is related to social, cultural and economic frameworks and the fact that discrimination and prejudice are embedded in formal and informal institutions. This particularly affects gender inequality, which according to the literature (Sarasúa and Gálvez 2003) is related to false beliefs and stereotypes that permeate education, family and functioning of the labour market.

Since 1970, women in Latin America have had considerably higher levels of well-being, measured in terms of health and education, than women in other developing regions. However, in spite of this progress, Latin American women have not had equal opportunities to earn income and have largely been excluded from positions of power in political and economic institutions. This makes the region an interesting context in which to consider the effects of globalization, both because the moves toward liberalization have been substantial and because women have had many of the prerequisites to participate in the market economy.

There is considerable discussion in the literature about the consequences of increasing women’s participation in the labour force during the globalization period, and interpretations of the evidence are diverse. According to the neoclassical view, as exemplified by the Stolper-Samuelson model, in developing countries free trade leads to rising wages for unskilled work, which is the relatively abundant factor in these economies (Samuelson 1948). Since unskilled work is often done by women we can infer from the Stolper-Samuelson model that globalization leads to increased demand for women to work, and hence should have as a final consequence a relative expansion of female participation and a narrowing of the gender gap (see the case of Mexico in Dell 2005; Artecona and Cunningham 2002; Garcia Cuellar 2001).

However, the evidence for the period 1970–1990 does not support this theory insofar as the growth of demand for female labour has not produced any robust decline in the gender earnings gap, which varies greatly between different regions of the world (Çağatay and Ertürk 2004). Moreover, the narrowing of gender gaps cannot be attributed only to the globalization process because other changes also had an impact. It may be that the improved quality of female labour with the incorporation of workers who were more experienced and better educated (O’Neill and Polachek 1993, Goldin 2000) and the fall in wages for less skilled male workers (Blau and Kahn 1997) came into play, rather than just an increase in the demand for female labour.

The most common heterodox approach to this question has been to consider the effect of gender wage gaps on successful export-led growth. Given that women are excluded from certain occupations and sectors, trade opening brought with it an increase in the labour supply of women in certain kinds of work, and this raised unemployment rates and reduced wages (Bergmann 1974) or perpetuated wage gaps (Joekes 1999; Seguino 2000; Berik et al. 2003).

Another approach in the literature has focused on the sacrifices that globalization has forced women in developing countries to make (Beneria 2003; Beneria et al. 2000). With very small or in some cases no improvements in household technologies, greater female participation levels in paid occupations have meant more total hours of work for women than for men. Adjustment policies and public expenditure cutbacks in the same period have had negative effects on welfare, health and other human capital services. This affects women more than men, since the former are usually responsible for the human capital formation of their children. Therefore changes in women’s economic situations must be analyzed together with other human and social capital conditions that determine their final market power.

Research on the evolution of the gender gap in the globalization era in Latin America has been addressed in various ways but there is scant literature with a historical perspective. One reason for this is that the data is very difficult to obtain. Prior to 1970 and before the first Household Surveys there is little aggregate statistical evidence relating to the gender wage gap.

Reyes Campo (2012) has studied the evolution of the gender wage gap in Chile using new sources of pre-1960 data. Prior to her work, there was no data for wages by gender for Chile. She has been able to document the gender gap from 1939 to 1974, using social security data. Although the gender wage gap diminished over time, the ratio of women’s wages to male wages only increased 14 percentage points from 1939 to 1968. So the evidence points towards discrimination.

For Uruguay, Camou (2010) studied the evolution of the gender gap in the textile and meatpacking industries, based on business archives for the period of 1915–1957. Her research also shows a trend towards a shrinking gender wage gap in these industries of about 20 %. Another paper compares the forces responsible for the evolution of gender gap and wage inequality in South Asia, East Asia and Latin America (Camps et al. 2006). Human capital, health improvement, labour market liberalization and equal treatment enforcement laws seem to be the main exogenous variables affecting women’s economic situation. Between 1975 and 2000 the gender gap narrowed, the main exception to the rule is China, where the economic gap between men and women increased. Everywhere else, the erosion in the gender gap has resulted in a fall of wage dispersion. In short, the narrowing of the gender gap during the second global era has tended to reduce wage inequality measured by both the Gini and Theil indexes.

Hoyos and Ñopo (2010) focus on the changes in the 1990s and 2000s and analyze Household Survey data for 1992 and 2007, controlling by education, number of children and other characteristics of the population. Their research explores the impact of changing characteristics of the labour supply on gender earnings inequality. The research shows that the gender gap decreased by 7 % overall during the period but with great heterogeneity among countries, and that cohort effects linked to life cycle influence gender earnings.

For the same two decades, Gálvez (2001) examined the dynamic of women joining the labour market and concluded that, despite improvements in the female activity rate, education level and the gender gap, their situation continued to be worse than men’s on indicators like the unemployment rate, the activity rate and the persistence of the wage gap. Greater gender equality is reduced less to economic aspects and more to institutional, cultural or regulatory aspects. Mexico and Chile are good examples of this negative correlation as they have the lowest levels of women’s income related to higher GDP per capita. Considering the impact of these changes on inequality, Gálvez remarks that the increase in inequality among women, which was due to uneven education gains, may have contributed to an increase in overall inequality.

Our research adds to this literature by extending the period under study thus to capture the impact of previous gender inequality on the present gender gap. Our purpose is to learn more about path dependency. Are the countries with an early high level of gender discrimination those in which it is more difficult to bring women into the workforce?

Lastly, we look at the relationship between overall inequality and gender inequality. We examine whether gender inequality and total inequality share the same trends, whether and why they can have an opposite trend.

There is a line of research that documents female labour force participation in the long run. Important studies have been done by Goldin (1994, 2006) for the USA, and she finds a “U” relation between female employment rates and economic growth. This is due to the relation between education and economic development. At low levels of development, education increases more for men than for women. As income rises, women’s participation decreases. When income increases further, education resources expand and women receive more education, which promotes their participation in the labour market. With more education and the expansion of non-industrial employment, women’s participation continues to increase and thus forms the “U” (Psacharopoulos and Tzannatos 1989; Schultz 1990). This evolution has been explored for countries with different income levels. The results show that those with higher or lower levels of income have higher female labour force participation rates than middle-income countries (Pampel and Tanaka 1986; Psacharopoulos and Tzannatos 1989; Tzannatos 1999).

Documentation of the evolution of female labour force participation in Latin America is very recent (Camou and Maubrigades 2013). Researchers have to struggle with the fact that, in general, women workers have not been well documented. The censuses carried out in the first decades of the twentieth century are inconsistent in the way they register women’s participation in the primary sector. This makes the total primary sector employment change atypical because work there tends to be less formalized and many women are involved in productive as well as home care activities.

There is another problem with the first censuses in Argentina, Chile and Uruguay carried out at the end of the nineteenth century and the early years of the twentieth century. These record each individual’s occupations regardless of whether or not that person was employed at the time. The present-day concept of “unemployed” was less applicable when wage labour was the exception rather than the rule. However, this was a period of rapid economic growth which implies that unemployment was probably very low.

Three periods can be distinguished:

The data collected for the years 1930–1970 give quantitative support to the thesis that female participation in labour markets decreased during the import substitution period. The state promoted a sort of male-breadwinner model during this period in Uruguay and Chile, which fostered a decrease in women’s participation in the labour market (Todaro 2004; Espino and Azar 2007).

Female labour force participation began to increase moderately in the 1970s and this trend continued into the 1980s (Table 1). However, only in the 1990s did the region see a significant improvement, in general, and it still remained lower than in the developed countries (Camou and Maubrigades 2013).

Besides this, the trajectories of female activity rates diverged across Latin America. Chile, Uruguay and Argentina had a relatively high rate of female labour participation from the beginning of the period, while Brazil, Colombia and Mexico were much further behind. By the end of the period, Brazil and Colombia had caught up with the first three. The other countries considered in Table 1 have much lower participation rates and, despite some improvement, they have never reached the levels of the Latin leaders.

Although the long-term trend was upwards throughout Latin America, the evidence shows no single pattern in how these countries incorporated women into the labour market during their various stages of development.

As regards education, over the last 60 years the educational level of Latin American countries has progressed to an unprecedented degree. In 1950, the illiteracy rate was about 40 % among persons aged 15 and over; by 2005 it had fallen below 10 %. The speed of progress has varied between countries and the illiteracy rate remains high in some countries, in particular those with large indigenous populations.

In the second half of twentieth century, in most of Latin America, female years of schooling increased to near or even slightly higher than men in countries like Argentina, Brazil, Costa Rica and Uruguay. Moreover, gender schooling differences have been reduced especially in recent decades. Only in countries with high illiteracy rates and/or large indigenous communities like Guatemala, Nicaragua or Honduras do we still see big gender gap in schooling.

Considering the expansion of primary education coverage followed by continual growth in basic education, Latin America has presented a set of education policies geared specifically to less privileged groups (in terms of ethnicity, geographical location and socioeconomic status). However, gender inequalities persist in a group of countries but are hidden behind overall averages.

Figure 1 shows the evolution of education during the period of analysis, comparing average female to average male schooling. Both sexes improved but girls had not yet reached the boys’ levels. The gender catching up in schooling started with the massive intake of women into primary education; it advanced with greater female participation in secondary education and progressed still further with more and more women at the higher education level.

However, when we examine the countries individually we find differences among them. One group of countries started the period with an average of years of study almost twice as high as the others. These were Argentina, Chile and Uruguay and to a lesser degree Costa Rica. This group implemented public policies to promote the enrolment of boys and girls in primary and secondary education. This resulted in sustained growth in years of schooling for both sexes during the second half of the twentieth century and women in Argentina and Uruguay performed even better than male.

In the second half of the century, another group of countries had average schooling of only 2 years, and girls still lagged behind boys even at the end of the period. This group included countries with larger indigenous and rural populations, and this may help explain why enrolment in formal educational institutions was so low. The group contains countries like Guatemala, Honduras, El Salvador and Nicaragua.

Mexico and Brazil are examples of good improvement in the period. The populations of both had low education levels in the late 1950s, but by the end of the period years of schooling had increased greatly in both. Although the causality has to be firmly established, it appears that rapid economic growth raised the demand for schooling during the period, and that both were proactive in education policies intended to improve human capital fast.

The relationship between activity rates and education has not been linear. At low levels of schooling, there is a strong correspondence between years of schooling and female labour force participation. At higher levels of female years of schooling the elasticity of the female activity rate decreases.

Although average years of schooling increased in most of the Latin American countries during the period, there are big differences in the sample. In 2000 Chile and Costa Rica had high schooling rates and low activity rates, while Bolivia, Ecuador, Paraguay and El Salvador had high activity rates but only modest increases in years of schooling. Towards the end of the period the countries in the region returned to the free market model and opened up to trade. This shift increased the demand for technical skills and reduced the demand for low-skill workers, a sector in which the percentage of women is higher than the percentage of female economy-wide (Bértola and Ocampo 2012).

Although overall female labour force participation has increased over the last 50 years, there are still gender differences among countries. Gender discrimination in wages has persisted over time and is common in many countries. The persistence suggests structural causes rooted in institutions and cultural norms. For instance, women are more likely to respond positively to increased economic opportunities in the labour market when childcare services are available or when their participation is socially accepted. In contrast, where significant barriers remain their progress is more limited (Fig. 2).

In the first decade of the twenty-first century, Latin American women typically received less than 35 % of total national income, although the figure was around 40 % in six leaders (Fig. 3). The women’s share increased strongly between 1990 and 2000 in Costa Rica, Ecuador, El Salvador, Honduras, Uruguay and Venezuela. In Costa Rica, Ecuador and El Salvador the reason behind this trend is more related to improvements in the female activity rate than to a narrowing of the gender wage gap but in Guatemala, Honduras, Uruguay and Venezuela the gap became considerably smaller during this period (Fig. 4).

In the first decade of the new century the countries with the narrowest wage gaps were Argentina, Colombia, Costa Rica, Guatemala, Honduras, Uruguay and Venezuela.

The other countries in our sample are falling behind. We can only partially reconstruct some countries’ trajectories because sources are scarce. The data we have indicates that the countries that had a narrower gender wage gap in the past are the ones performing better at present. In the period 1970–2010 the gap in Brazil was wider than that in Argentina or Uruguay.

In Latin America, inequality among men has more weight in the total Gini level due to their greater participation in the labour market and to greater inequality among males (see Appendices 1, 2 and 3). The distribution of schooling and skills among sexes may be part of the explanation.

There is no a clear trend in the evolution of inequality among women. While the overall average remains unchanged over the period, there is a group of countries (Argentina, Uruguay, Costa Rica, Venezuela and Peru) with increasing inequality in women’s wages. The overall inequality increase during the period probably affects women as well as men. The reason the spread among women’s wages is greater is probably that they join the labour market with greater human capital because their years of schooling and work experience are increasing.

In an international comparison, Blau and Kahn (1997) found that labour markets with highly unequal rates of remuneration also have high levels of gender inequality. Next we tested their relation between overall wage inequality and gender gap for Latin America.

At first glance, Latin American evidence confirms the postulated relation. The countries that are more unequal (with Gini ratings above 0.5: Fig. 5) also have wider gender gaps. When we look at the differences among countries over the period we can identify two groups. First, there are those in which overall inequality remained relatively high over the period and the gender gap narrowed but female wage earnings remained lower than male. This was the case in Chile, Bolivia, Honduras, Peru, Nicaragua and Ecuador. Brazil was a special case with high inequality and a wide gender gap (see Appendices 1, 2 and 3).

There is a second group with relatively low total inequality and a narrowing gender gap, and here we find Argentina, Uruguay, Costa Rica and Venezuela. In particular, Argentina and Uruguay are also countries with a lower gender gap in the past and a higher activity rate. In any case, path dependence does not seem to be the only way to achieve a narrower gender gap: Venezuela belongs to this group although traditionally it has had low female participation rate.

Another factor that probably impacts on the gender wage gap is the historical pattern of women’s participation in the labour market. In the period 1940–1970, gender inequality was high in Latin America and this was expressed in a low level of female labour participation and a wide gender gap. There are few data available for the 1980s, the so-called lost decade, and in the 1990s we entered a new phase with a narrower gender wage gap and greater variability in women’s activity rates across the region. At the end of the period women’s participation in labour markets was still rising but the gender gap had not significantly narrowed. It can be seen that this correlation between the two variables is not very strong towards the end of the period in which many countries have similar gender gaps and there is a wide spread in the participation rate.

The trends in women activity rates in Latin American labour markets in 2000s are very different between countries. While the general trend is rising over time, only in very few cases does the average reach 50 %. The heterogeneity revealed in Fig. 6 could have many explanations and is probably linked to the liberal deregulatory economic policies prevailing since the 1980s. But the gender gap remained stable in the 1990s and 2000s.

These results also show that increases in women’s participation in the labour market do not necessarily mean a substantial change because as the participation rate increases the female occupation and wage dispersion also increase. Gender gap trends depend on individual investment in education and the returns to that education. In recent years, female education levels have risen relative to those of men. Although countries have achieved high female labour market participation rates, it is clear that educational equality is not sufficient to secure gender parity in income. One of the reasons why the gender gap has persisted is that it tends to be wider at higher levels of education. The evolution of the wage gap between men and women is different at different educational levels. In the tertiary education group the gender gap was wide at the start of the period and there was little subsequent improvement, which shows the glass ceiling effect, whereas in the group with only primary education the gap narrowed more during the same period.

Women’s education improved considerably in the 1990s but, as we saw above, the increasing skill premium that accompanied the new economic model was less favourable for better educated women. Increasing female labour force participation and improved educational attainment in a context of relatively stable male labour force participation and educational attainment contributed to an overall narrowing of the gap. As we saw above, a steady convergence between the wages of women and those of men is not automatic. The portion of the wage gap that cannot be explained by labour market characteristics related to workers’ skills is generally attributed to discrimination and to differences in preferences between men and women. Women tend to enter different careers than men.

There is still a tendency for occupations to be “male dominated” or “female dominated,” and the female-dominated ones tend to pay less even when men and women have the same educational level. The majority of women work in the services and agricultural sectors, and the fact is that areas in which women are the vast majority—secretaries, teachers and nurses—are poorly paid.

In the last 50 years, schooling levels have increased and the upgrading of the occupational structure as a result of technological changes and economic growth has created a demand for more skilled and educated labour. The increasing demand for a skilled and highly educated labour has resulted, among other things, in policies to raise the overall educational level of the population. In spite of that Fig. 7 shows a high level of sex segregation persisting among employees with tertiary education, despite the relative equalization between men and women in overall level of educational attainment. There are wage disparities between men and women with the same educational qualifications in all Latin American countries analyzed and at all educational levels, but in particular among the more educated population.

Our in-depth study of the wage gap between men and women shows that the biggest differences that remain are among those with the highest levels of qualifications and incomes (Fig. 8). When we compare the evolution of the gender gap among the more educated population in the decade of 1990s and 2000s, we find that although the differences decrease, men’s average wages stayed at around 25 percentage points higher than women’s. At the end of that decade there were still large wage differentials between men and women with the same level of educational attainment.

In the light of these results, whether these wage differences in the group of tertiary education are related to women’s human capital being underused in the labour market. One way to approach this is to examine the distribution of the most highly educated peoples by their income levels. However, we have been able to confirm that 80–90 % of people of both sexes with tertiary education levels are in the highest wage level (see Appendices 1, 2 and 3). Even though our data do not show the structure of occupations by sex inside the group of high income level, we can assume that this might be different among female and males.