Gender equality in the workplace: The effect of gender equality on productivity growth among the Chilean manufacturers

The economic study towards gender equality has a long history. Traditionally, people believe that higher equality between female and male employees under the same business lead to more harmonious and efficient surroundings; consequently, all workers will be encouraged to contribute and promote the firm’s growth greatly. To examine this statement, this paper empirically studies the correlation between gender equality, productivity, and employment. To be specific, we study whether gender equality in the workplace can effectively promote manufacturing productivity growth, and how this growth is affected by the firms’ employees and sizes. We looked into the Chilean manufacturing firms from 2001 to 2007; the data come from National Annual Industrial Survey conducted the National Statistics Institute of Chile. In order to avoid potential endogeneity and simultaneity, we used a semi-parametric method to estimate productivity. We consider four types of employees: executives and specialized production workers, identified as high-skill employees; and administrative staff and auxiliary production workers, as low-skill employees. Our statistical analysis as well as many other literatures shows that in Chile, severe gender inequality still exists nowadays. For example, the majority of the observed employees (80%) are male. We then study gender equality through two measures at the same time: female labor-force participation rate, and gender equivalence as how the female participation rate deviates from 0.5. We conduct simultaneous regression to estimate the influence exerted on firms’ productivity by these two measures among each of the four types of employees – executives, specialized workers, administrative staff, and auxiliary workers. Our findings are mixed and very interesting. Among those small firms with less than 50 employees, higher female labor-force participation among high-skill employees significantly increases a firms’ productivity. For larger firms with more than 50 employees, only better gender equality among the low-skill employees improves productivity. Therefore, a more equalized distributed workforce between female and male workers does significantly lead to faster productivity growth, but it depends on the size of the firm and specific types of employees. Therefore indeed, we can effectively promote the growth of a firm through different gender equality policies such as balancing welfare treatment between males and females, or publicizing our efforts to the society; but we also need to count both the firm’s size and the types of employees into consideration. Our findings also provide insights into a firm’s growth pattern. High-skill employees are the leading force of small firms, while big firms consistently reply on all the ordinary-level employees.