To reverse widening inequality, keep a tight rein on automation
The industrialized world, especially the United States, suffered severe economic ills even before the COVID-19 pandemic. Unless we recognize them now, we are unlikely to produce solutions.
Chief among these problems is the nature of economic growth, which has become much less shared since the 1980s. Wider inequality in much of the industrialized world; the disappearance of good, high-paying, secure jobs; and the decline in the real wages of less-educated workers in the United States are all facets of this unshared growth (Acemoglu 2019), which has deepened discontent and sparked protests from both left and right in the years since the Great Recession.
My research with Pascual Restrepo indicates that automation accounts for much of this loss of shared growth, along with such factors as globalization and the declining power of labor relative to capital (Acemoglu and Restrepo 2019). With the next phase of automation rapidly unfolding, driven by machine learning and artificial intelligence (AI), the world’s economies stand at a crossroads. AI could further exacerbate inequality. Or, properly harnessed and directed through government policies, it could contribute to a resumption of shared growth.
Automation is the substitution of machines and algorithms for tasks previously performed by labor, and it’s nothing new. Ever since weaving and spinning machines powered Britain’s Industrial Revolution, automation has often been an engine of economic growth. In the past, however, it was part of a broad technology portfolio, and its potentially negative effects on labor were counterbalanced by other technologies boosting human productivity and employment opportunities. Not today.
AI could further exacerbate inequality. Or, properly harnessed and directed through government policies, it could contribute to a resumption of shared growth.
The next phase of automation, relying on AI and AI-powered machines such as self-driving cars, may be even more disruptive, especially if it is not accompanied by other types of more human-friendly technologies. This broad technological platform, with diverse applications and great promise, could help human productivity and usher in new human tasks and competencies in education, health care, engineering, manufacturing, and elsewhere. But it could also worsen job losses and economic disruption if applied exclusively for automation.
The pandemic has certainly given employers more reasons to look for ways of substituting machines for workers, and recent evidence suggests they are doing so (Chernoff and Warman 2020).
Some argue that pervasive automation is the price we pay for prosperity: new technologies will increase productivity and enrich us, even if they dislocate some workers and disrupt existing businesses and industries. The evidence does not support this interpretation.
Despite the bewildering array of new machines and algorithms all around us, the US economy today generates very low total factor productivity growth—economists’ headline measure of the productivity performance of an economy, which gauges how efficiently human and physical capital resources are being used. In particular, total factor productivity growth has been much lower over the past 20 years than during the decades after World War II (Gordon 2017). Even though information and communication technology has advanced rapidly and is applied in every sector of the economy, industries that rely more intensively on these technologies have not performed better in terms of total factor productivity, output, or employment growth (Acemoglu and others 2014).
The reasons for this recent slow productivity growth are not well understood. But one contributing factor appears to be that many automation technologies, such as self-checkout kiosks or automated customer service, are not generating much total factor productivity growth. Put differently, rather than bringing productivity dividends, automation has been excessive because businesses are adopting automation technologies beyond what would reduce production costs or because these technologies have social costs because they give rise to lower employment and worker wages. Excessive automation may also be a cause of the slowdown in productivity growth. This is because automation decisions are not reducing costs and, even more important, because a singular focus on automation technologies may be causing businesses to miss out on productivity gains from new tasks, new organizational forms, and technological breakthroughs that are more complementary to humans.
But is automation really excessive? I believe so. First of all, when employers make decisions about whether to replace workers with machines, they do not take into account the social disruption caused by the loss of jobs—especially good ones. This creates a bias toward excessive automation.
Even more important, several factors appear to have fueled automation beyond socially desirable levels. Particularly important has been the transformation in the corporate strategies of leading US companies. American and world technology is shaped by the decisions of a handful of very large, very successful tech companies that have tiny workforces and a business model built on automation (Acemoglu and Restrepo 2020). Big Tech companies including Amazon, Alibaba, Alphabet, Facebook, and Netflix are responsible for more than $2 of every $3 spent globally on AI (McKinsey Global Institute 2017). Their vision, centered on the substitution of algorithms for humans, influences not only their own spending but also what other companies prioritize and the aspirations and focus of hundreds of thousands of young students and researchers specializing in computer and data sciences.
Of course there is nothing wrong with successful companies pursuing their own vision, but when this becomes the only game in town, we must be on guard. Past technological successes have more often than not been driven by a diversity of perspectives and approaches. If we lose this diversity, we also risk losing our technological edge.
The dominance of a handful of companies over the path of future technology has been exacerbated as well by dwindling support from the US government for fundamental research (Gruber and Johnson 2019). In fact, government policy excessively encourages automation, especially through the tax code. The US tax system has always treated capital more favorably than labor, encouraging businesses to substitute machines for workers, even when workers may be more productive.
My research with Andrea Manera and Pascual Restrepo shows that, over the past 40 years, labor has paid an effective tax rate of more than 25 percent via payroll and federal income taxes (Acemoglu, Manera, and Restrepo 2020). Even 20 years ago, capital was more lightly taxed than labor, with equipment and software investment facing tax rates of about 15 percent. This differential has widened with tax cuts on high incomes, the conversion of many businesses to closely held S corporations that are exempt from corporate income taxes, and generous depreciation allowances. As a result of these changes, investments in software and equipment are taxed at rates of less than 5 percent today, and in some cases corporations can even derive net subsidies when they invest in capital. This creates a powerful motive for excessive automation.
A path of future technology centered on automation is not preordained. It is a consequence of choices by researchers who focus on automation applications at the expense of other uses of technology and by companies that build business models on automation and reducing labor costs rather than on broad-based productivity increases. We can make different choices. But such a course correction calls for a concerted effort to redirect technological change, which can happen only if government plays a central role in the regulation of technology.
Let me be clear that I do not mean government blocking technology or slowing technological progress. Rather, the government should provide incentives that tilt the composition of innovation away from an excessive focus on automation and more toward human-friendly technologies that produce employment opportunities, especially good jobs, and a more shared form of economic prosperity. We do not know exactly what the most transformative human-friendly technologies of the future may be, but many sectors provide plenty of opportunities. These include education, where AI can be used for much more adaptive and student-centered teaching combining new technologies and better-trained teachers; health care, where AI and digital technologies can empower nurses and technicians to provide more and better services; and modern manufacturing, where augmented reality and computer vision can increase human productivity in the production process. We have also witnessed during the pandemic how new digital technologies, such as Zoom, have fundamentally broadened human communication and capabilities.
Governments have always influenced the direction of technology, and we already know how to build institutions that do this in a more beneficial way.
This recommendation may still strike many as unusual. Isn’t it highly distortionary for governments to influence the direction of technology? Could they really influence where technology goes? Wouldn’t we be opening the door to a new kind of totalitarianism with the state intervening even in technological decisions?
I maintain that in fact there is nothing unusual or revolutionary about this idea. Governments have always influenced the direction of technology, and we already know how to build institutions that do this in a more beneficial way for society.
Governments around the world routinely affect the direction of technology via tax policies and support for corporate research and universities. As I have shown, the US government has encouraged automation through its asymmetric taxation of capital and labor. A first step would be to correct that imbalance. This would go a long way but would not be sufficient by itself. Much more can be done—for example, via R&D subsidies targeted to specific technologies that help human productivity and increase labor demand.
This brings me to the second objection: can the government really effectively redirect technology? My answer is that governments have done this in the past, and in many cases with surprising effectiveness. The transformative technologies of the 20th century, such as antibiotics, sensors, modern engines, and the internet, would not have been possible without the government’s support and leadership. Nor would they have flourished as much without generous government purchases. Even more relevant, perhaps, for efforts to redirect technology in a human-friendly trajectory is the example of renewable energy.
Four decades ago renewable energy was prohibitively expensive, and the basic know-how for green technologies was lacking. Today renewables make up 19 percent of energy consumption in Europe and 11 percent in the United States, and costs have declined in the same ballpark as fossil-fuel energy (IRENA 2020). This has been achieved thanks to a redirection of technological change away from a singular focus on fossil fuels toward greater efforts for advances in renewables. In the United States, the primary driver of this redirection has been modest government subsidies for green technologies as well as the changing norms of consumers.
The same approach can strike a balance between automation and human-friendly technologies. As in the case of renewable energy, change must start with a broader societal recognition that our technology choices have become highly unbalanced, with myriad adverse social consequences. There needs to be a clear commitment by the federal government to redress some of these imbalances. The government should also address the dominance of a handful of big tech companies over their markets and the direction of future technology. This of course would have other benefits, such as ensuring greater competition and protecting privacy.
The most challenging objection to these ideas is political—the same challenge raised by Friedrich Hayek to the development of Britain’s welfare state in what became his celebrated book The Road to Serfdom. Hayek warned against the rise of the administrative state, arguing that it would crush society and its freedoms. As he later summarized it, his concern was that
… extensive government control produces … a psychological change, an alteration in the character of the people.… Even a strong tradition of political liberty is no safeguard if the danger is precisely that new institutions and policies will gradually undermine and destroy that spirit.
Although Hayek’s concerns were well-placed, he turned out to be wrong. Liberty and democracy were not quashed in the United Kingdom or in Scandinavian countries that adopted similar welfare state programs. On the contrary, by ensuring a social safety net, these systems sparked greater opportunities for individual freedom to flourish.
There is an even more fundamental reason the welfare state did not threaten liberty and democracy. James Robinson and I lay out the conceptual framework in our new book, The Narrow Corridor (Acemoglu and Robinson 2019). We explain why the best guarantors of democracy and liberty are not constitutions or clever designs of separation of powers, but society’s mobilization. That requires a balance between state and society that puts the polity in the narrow corridor where liberty flourishes and where the state and society can gain strength and capacity together. So when we need the state to shoulder greater responsibilities, we can also experience a deepening of democracy and greater societal mobilization. This means citizens actively participating in elections and becoming informed about politicians and their agendas (and their misdeeds), civil society organizations expanding, and media helping to hold politicians and bureaucrats accountable. This is what happened in much of the industrialized world. As the state took on more, democracy deepened and society’s involvement and ability to keep politicians and bureaucrats in check intensified.
Whether society can play its part in forging a new chapter in our history is an open question. A major complicating factor is that new digital technologies have also weakened democracy. With misinformation rising, AI-powered social media creating filter bubbles and echo chambers inimical to democratic discourse, and political engagement waning, we may not have the right tools to keep the state in check. Yet we do not have the luxury not to try.
Author:

Daron Acemoğlu, Institute Professor at MIT

Compliments of the IMF Finance & Development.
The post IMF | Remaking the Post-Covid World first appeared on European American Chamber of Commerce New York [EACCNY] | Your Partner for Transatlantic Business Resources.

The EU and U.S. agreed today to suspend all retaliatory tariffs on EU and U.S. exports imposed in the Airbus and Boeing disputes for a four-month period. The suspension allows both sides to focus on resolving this long-running dispute. It provides an important boost to EU exporters, since the U.S. had been authorised to raise tariffs on $7.5 billion of EU exports to the U.S. Similarly, EU tariffs will be suspended on some $4 billion worth of U.S. exports into the EU.
European Commission Executive Vice-President and Trade Commissioner Valdis Dombrovskis said: “This is a significant step forward. It marks a reset in our relationship with our biggest and economically most important partner. Removing these tariffs is a win-win for both sides, at a time when the pandemic is hurting our workers and our economies. This suspension will help restore confidence and trust, and therefore give us the space to come to a comprehensive and long-lasting negotiated solution. A positive EU-U.S. trade relationship is important not only to the two sides but to global trade at large.”
These tariffs will now be suspended on both sides for a four-month period, as soon as internal procedures on both sides are completed.
Background
In 2018, the Appellate Body found that the EU and its Member States had not fully complied with the previous WTO rulings with regard to EU subsidies to aircraft maker Airbus.
In March 2019, the Appellate Body confirmed that the U.S. had not taken appropriate action to comply with WTO rules on subsidies to aircraft maker Boeing.
In October 2019 the WTO authorised the U.S. to take countermeasures against European exports worth up to $7.5 billion, and the U.S. imposed these tariffs on 18 October 2019. The EU Member States concerned have taken in the meantime all necessary steps to ensure full compliance.
In October 2020, the WTO authorised the EU to take similar countermeasures on $4 billion of U.S. exports to the EU against illegal U.S. subsidies to aircraft maker Boeing. The EU sought an agreement with the United States that would have allowed the EU to avoid imposing these tariffs. Since, the U.S. at that time was not ready to accept a negotiated settlement including an immediate removal of the U.S. tariffs, the EU decided on 9 November 2020 to impose its countermeasures. On 31 December 2020, the U.S. changed the reference period for the calculation of its sanctions, thereby substantially increased the range of EU products subject to tariffs.
Compliments of the European Commission.
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The Delegation of the European Union to the United States is pleased to announce that it has granted to distinguished partners funding for projects in support of strengthening transatlantic relations. For the next two years, these four grants will promote a broad range of opportunities for Americans and Europeans to engage and deepen their understanding on a range of issues that are of common interest and concern.

MEET EU: Making Encounters, Engaging Transatlanticists
Coordinated by the University of North Carolina at Chapel Hill (UNC), in partnership with the University of Pittsburgh (PITT) and Florida International University (FIU), this project introduces young Americans along the East Coast to the EU through model EU simulations, a Brussels-Luxemburg study tour for educators, an EU Film Festival and short film competition, a community road show, and expert career panels.
Engaging the New Generation of Transatlanticists
The German Marshall Fund of the United States (GMF) in partnership with the Center for a New American Security (CNAS) will organize throughout the United States a series of diverse and engaging activities on the EU to inform and engage the next generation of American leaders and traditionally under-represented groups. Activities include an essay contest, study tour, town hall meetings, blog post/social media contest, and transatlantic political-military game.
TRAnsatlantic Civil society dialogues with Key policy STAkeholdeRs  (TRACKSTAR)
The Waterford Institute of Technology (WIT) together with James Madison University (JMU) and the Lares Institute will encourage transatlantic dialogue and cooperation between non-governmental organisations and interest groups representing diverse constituencies on both sides of the Atlantic. Seven distinct working groups will tackle a range of policy areas, including climate change, energy, the circular economy and biodiversity, digital economy, trade and investment, democracy and transparency, and regulatory cooperation.
Transatlantic Working Group on the Future of Work
Bruegel AISBL (BA) in partnership with the German Marshall Fund of the United States (GMF) will establish a working group of transatlantic experts to exchange best practices, build strategic alliances and provide analysis and recommendations on new developments and challenges in the field of work and employment.
More information on these grants
Compliments of Delegation of the European Union to the United States.
The post Strengthening EU-US Relations with Four New Projects first appeared on European American Chamber of Commerce New York [EACCNY] | Your Partner for Transatlantic Business Resources.

Released on March 5, 2021 |
“The European Union and the United States today agreed on the mutual suspension for four months of the tariffs related to the World Trade Organization (WTO) Aircraft disputes. The suspension will cover all tariffs both on aircraft as well as on non-aircraft products, and will become effective as soon as the internal procedures on both sides are completed.
“This will allow the EU and the US to ease the burden on their industries and workers and focus efforts towards resolving these long running disputes at the WTO.
“The EU and the US are committed to reach a comprehensive and durable negotiated solution to the Aircraft disputes. Key elements of a negotiated solution will include disciplines on future support in this sector, outstanding support measures, monitoring and enforcement, and addressing the trade distortive practices of and challenges posed by new entrants to the sector from non-market economies, such as China.
“These steps signal the determination of both sides to embark on a fresh start in the relationship.”
Compliments of the Office of the United States Trade Representative. 
The post USTR | Joint Statement of the European Union and the United States on the Large Civil Aircraft WTO Disputes first appeared on European American Chamber of Commerce New York [EACCNY] | Your Partner for Transatlantic Business Resources.

The Parliament is discussing a carbon levy on imported goods to stop companies moving outside the EU to avoid emissions standards, a practice known as carbon leakage.
As European industry struggles to recover from the Covid-19 crisis and the economic pressure due to cheap imports from trading partners, the EU is trying to honour its climate commitments, whilst keeping jobs and production chains at home.
Discover how the EU’s recovery plan prioritises creating a sustainable and climate-neutral Europe
An EU carbon levy to prevent carbon leakage
EU efforts to reduce its carbon footprint under the European Green Deal and become sustainably resilient and climate neutral by 2050, could be undermined by less climate-ambitious countries. To mitigate this, the EU will propose a Carbon Border Adjustment Mechanism (CBAM), which would apply a carbon levy on imports of certain goods from outside the EU. MEPs will put forward proposals during March’s first plenary session.
How would a European carbon levy work?
If products come from countries with less ambitious rules than the EU, the levy is applied, ensuring imports are not cheaper than the equivalent EU product.
Given the risk of more polluting sectors relocating production to countries with looser greenhouse gas emission constraints, carbon pricing is seen as an essential complement to the existing EU carbon allowances system, the EU’s emissions trading system (ETS).
What is carbon leakage?
Carbon leakage is the shifting of greenhouse gas emitting industries outside the EU to avoid tighter standards. As this simply moves the problem elsewhere, MEPs want to avoid the problem through a Carbon Border Adjustment Mechanism (CBAM).
Existing carbon pricing measures in the EU
Under the current emissions trading system (ETS), which provides financial incentives to cut emissions, power plants and industries need to hold a permit for each tonne of CO2 they produce. The price of those permits is driven by demand and supply. Due to the last economic crisis, demand for permits has dropped and so has their price, which is so low that it discourages companies from investing in green technologies. In order to solve this issue, the EU will reform ETS.
What the Parliament is asking for
The new mechanism should align with World Trade Organisation rules and encourage the decarbonisation of EU and non-EU industries. It will also become part of the EU’s future industrial strategy.
By 2023, the Carbon Border Adjustment Mechanism should cover power and energy-intensive industrial sectors, which represent 94% of the EU’s industrial emissions and still receive substantial free allocations, according to MEPs.
They said that it should be designed with the sole aim of pursuing climate objectives and a global level playing field, and not be used as a tool to increase protectionism.
MEPs also support the European Commission proposal to use the revenues generated by the mechanism as new own resources for the EU’s budget, and ask the Commission to ensure full transparency about the use of those revenues.
The Commission is expected to present its proposal on the new mechanism in the second quarter of 2021.
Learn more about the EU’s responses to climate change
Compliments of the European Parliament.
The post EU Parliament | Carbon leakage: prevent firms from avoiding emissions rules first appeared on European American Chamber of Commerce New York [EACCNY] | Your Partner for Transatlantic Business Resources.

March 8, 2021 | Blog post by Christine Lagarde, President of the ECB |
As the COVID-19 pandemic took hold across the world, the past year was one of sacrifice. Too many lost their lives, their loved ones. Others fought hard to survive – physically, emotionally and financially.
One year into the pandemic, we can clearly see that the social and economic impact of the virus is affecting women particularly hard. Women work disproportionately in the sectors that have been worst hit by the virus. They are more likely to have informal work that falls outside the scope of government support programmes. And many women have been left struggling to care for young and elderly family members while trying to keep their own careers on track.
These developments have the worrying potential to dial back the hard-fought progress made on gender equality. We must not let this happen.
But there is also hope for change. Existential crises disrupt our way of life and prompt us to reset some of our values. The pandemic has not only opened our eyes to significant weaknesses in our society – it has also forced us to do things differently. And this is where I see potential to change things for the better.
That’s why today, on International Women’s Day, I invite all of us – women and men alike – to choose to challenge old patterns and to adopt new ones more suitable for our needs today. We have our work cut out, at home, at work and in leading the way.
Work begins at home, the heart and centre of all our lives during confinement. The pandemic has vividly highlighted the imbalance in unpaid work between women and men. But it has also shown us that partners can step up. In some families, fathers − who themselves had to work from home or were put on reduced working hours – became the primary caretakers, while mothers worked in essential jobs outside the home.
Such a break with traditional norms, if it lasts, has the potential to free up women to fulfil their ambitions elsewhere – at work or in community life. Greater participation of women in work – supported by adequate public childcare and flexible working time arrangements for women and men – would be a big step towards closing the gender pay gap. Women in the EU earn on average 14.1% less per hour than men.[1] Growing up in a household where chores are more equally shared also gives children a more equitable idea of family roles than that of previous generations.
Work continues at the workplace. The pandemic has also reminded us of the crucial professional role women play in society. Out of around 18 million healthcare and social workers in the euro area, three-quarters are female, with a similar share of women working in education. Both sectors have been indispensable during the pandemic. Now that we have seen the true value of these jobs to society, they should be recognised and paid accordingly.
Yet, we also need more women working in science, technology, engineering and mathematics. For one, a stronger representation of women in these better paid jobs will help to narrow the gender pay gap. But jobs in these fields are also key drivers of innovation and are fundamental for the transition to a more digital and more sustainable economy.
So let’s choose to challenge established career paths – to encourage women and girls to advance where too few women have gone so far. Today at the ECB we are launching the next round of our Women in Economics Scholarship, which aims to address the low representation of women in this field.
Work endures in leadership. The pandemic has shown us the value of female leadership, especially in times of crisis. Research conducted during the pandemic showed that women were rated as more effective leaders than men by those who worked with them. Female leaders were better at engaging with their employees.[2]
Yet only 18.5% of EU heads of government are female.[3] Although representing more than half of the EU population (51%), women make up no more than one-third of national parliamentarians.[4] None of the euro area central banks, whose governors are appointed by their national governments, is headed by a female governor.
In corporate boardrooms, the share of women is similarly low. No more than 7.5% of the chief executives at Europe’s largest listed companies are female.[5]
At the ECB, we more than doubled the share of female senior managers between 2013 and 2019 and are now aiming to raise this share further to 40% by 2026.
So let’s choose to challenge the way we lead and bring more diversity into our boardrooms, parliaments and governments. Sharing the work at home more equally and opening up more career paths for women will empower women to contribute even more to society, get involved in politics and become the voice for so many who need to be heard.
Let’s proceed to succeed so that we emerge from this pandemic together as a stronger, more equitable and more sustainable society.
This blog post appeared as an opinion piece in the following publications: Kurier (Austria), De Tijd and L’Echo (Belgium), Sigmalive.com (Cyprus), ERR (Estonia), Helsingin Sanomat (Finland), L’Opinion (France), Redaktionsnetzwerk Deutschland (Germany), LiFO.gr (Greece), Irish Independent (Ireland), Corriere della Sera (Italy), Delfi.lv (Latvia), LRT (Lithuania), Times of Malta (Malta), Diário de Notícias and Jornal de Notícias and Dinheiro Vivo (Portugal), Denník N (Slovakia), and El Confidencial (Spain).

Compliments of the European Central Bank.
The post Christine Lagarde | Choose to challenge women’s roles at home, at work and in our society first appeared on European American Chamber of Commerce New York [EACCNY] | Your Partner for Transatlantic Business Resources.

March 8, 2021 | Keynote Speech by Chief Economist Gita Gopinath at the Inaugural Dr. Hansa Mehta Lecture |
Hello everyone.
Thank you for your generous introduction, La Neice, and also thank you to the Permanent Mission of India to the United Nations and the United Nations Academic Impact for inviting me to speak at this event today.
It is a tremendous honor to deliver the inaugural lecture in memory of Dr. Hansa Mehta – an Indian freedom fighter, an educator, a policy maker, and above all, a champion of women’s rights. We have Dr. Mehta to thank for ensuring that the Indian constitution enshrines gender equality. We have Dr. Mehta to thank for correcting and replacing the phrase “All men are born free and equal” in the United Nation’s Universal Declaration of Human Rights with “All human beings are born free and equal.”
It therefore befits Dr. Mehta’s legacy that we are gathered virtually today at the United Nations on International Women’s Day. And as an Indian woman, I am especially grateful for the opportunity to honor Hansabehn, on whose strong shoulders I and many others stand.
We are meeting amidst a global health and economic crisis which threatens to roll back years of hard-won economic and social gains for women. Women have been affected disproportionately by the pandemic because they work predominantly in sectors such as
restaurants and hospitality that have been hit hardest by the lockdowns, and as the main caregivers at home they have had to drop out of the labor market as schools closed. In developing countries, women are over-represented in the informal sector where they face lower pay, less job security and lower social protection. In these countries, girls have dropped out more from school to help in households. And further, recent reports from the United Nations highlight a disturbing fact that violence against women and girls has intensified since the outbreak of the pandemic.
These disparities worsen already-large gender gaps that persisted before the crisis. While there have been successes over the past few decades as women pushed the boundaries on educational attainment, economic and political participation, and broke through the glass ceiling to lead countries, corporations, and international organizations, there is much more than needs to be done to achieve gender equality.
Globally, only 55 percent of women are engaged in the labor market as opposed to 78 percent of men. In 72 countries, women are barred from opening bank accounts or obtaining credit. Women continue to earn about 50 percent less than men for the same type of work, and they represent only 25 percent of parliamentarians.
The moral case for gender equity is very clear. Today I will emphasize that we at the IMF have strived to make the point that the economic case for gender equity is also very clear.
As you are aware the IMF has been promoting policies to support growth and stability for more than 70 years. We assess the economic health of our member countries, provide policy advice and essential financing as the global lender of last resort. In just this pandemic we have provided financial assistance to 85 countries, in addition to debt relief for our poorest members.
With all this on our plate, why do we as an institution also care so deeply about women’s empowerment and inclusive growth? We care about it not only because it is a moral imperative, but because gender empowerment is critical for the economic wellbeing of both men and women, and for societies as a whole. Empowering women, through improving access to health, education, earning opportunities, rights and political participation, can be an economic game changer for any country. A wealth of research at the IMF, at the United Nations, other international organizations and academic institutions supports this assertion.
As countries around the world struggle to grow their economies—grappling with ageing populations, and buffeted by trade shocks, social unrest, weather-related disasters and now, the worst peacetime crisis in a century–tapping into the huge potential of women is unambiguously a win-win for both women’s empowerment and inclusive global economic growth.
I will elaborate next on how gender equity can lead to inclusive and stronger global economic growth, and the role governments, the private sector and international organizations should play in empowering women.
First, gender equity in the labor market can deliver significant gains to national income. Our research has shown that if women were to participate in the labor force to the same extent as men, national income could increase significantly. For example, by as much as 5 percent in the United States, 9 percent in Japan and as much as 15 percent in countries with the lowest female labor force participation rates. With female labor force participation falling in many countries during the pandemic, targeted policies such as hiring subsidies may be needed to swiftly bring about the reintegration of female workers’ into the labor force.
As several countries face headwinds to growth from an aging population and shrinking labor force, raising female labor force participation can be a part of the solution. We have estimated that in Japan, for example, raising female labor force participation rates to the levels of Northern Europe could boost GDP growth by up to 0.4 percentage points in the transition years. And in a country like Canada, where female labor force participation is already quite high, the impact of employing more highly educated women could boost labor productivity by up to 0.4 percentage points per year.
Second, better economic opportunities and equal pay for women not only lowers gender inequality but also lowers income inequality. Moving from a situation of perfect gender inequality to perfect gender equality is estimated to be equivalent to lowering income inequality from levels prevailing in Venezuela to those in Sweden. As we have shown, lower income inequality in turn brings with it higher and more durable growth.
Third, women’s empowerment enhances economic resilience. Recent IMF staff research has made a strong case that more women leaders in finance would not only reduce existing gender employment gaps in the corporate sector, but also strengthen bank stability. This work finds that higher share of women on banks’ board of directors and banking supervision boards are associated with greater financial sector resilience, lower probability of insolvency, and greater profitability.
As women globally account for less than 20 percent of board seats in banks and banking supervision agencies, and account for fewer than 2 percent of bank CEOs, this suggests tremendous room to achieve greater financial sector resilience while also increasing banking sector profitability.
There is rigorous evidence that when women are in leadership positions it enhances the lives of other women. For example, in 1993, India started reserving a fraction of village council leadership positions for women. As a consequence, in villages with a female leader there was a significant rise in parents’ aspirations for their daughters, the gender gap in adolescent educational attainment was erased, and girls spent less time on household chores. This policy also weakened stereotypes about gender roles in the public and domestic spheres.
To summarize, the empowerment of women is an important channel by which we can obtain stronger, more inclusive, and more resilient growth. This takes me to the next question: what needs to be done? To be clear, responsibility for this must be shared by governments, the private sector, and international organizations.
A natural place to start is with governments which can use fiscal policy to assist with the advancement of women in education, health, financial inclusion and economic empowerment. Gender budgeting can ensure that tax and spending policies transparently and adequately include provisions for women’s access to opportunity in education and the workplace. IMF research has found that higher spending on childcare has contributed positively to female employment in the Czech Republic, Poland and Norway. Flexible working arrangements, such as those established in Japan, have also been shown to reduce gender gaps in labor force participation.
Well-designed workplace regulations that protect women under the law—including parental leave policies that encourage greater parity between men and women, flexible work arrangements, access to affordable childcare and health services, as well as the equitable treatment of women in courts and protection against violence—have all been shown to significantly raise women’s participation in economic activity. Governments can also reform tax policies that penalize secondary earners—who is most often a woman—to encourage women to join the labor force. Studies have found that reforming secondary earner taxation and boosting tax incentives for part-time work has helped support female employment and raise labor force participation in countries from Korea to Norway to the United Kingdom.
Governments must also take concrete actions to level the playing field for women. In many regions of the world, a key obstacle to women’s empowerment are outdated legal, regulatory and institutional impediments—all of which are in the hands of governments to reform. In more than 100 countries, women encounter at least one legal impediment to their participating in the economy. In some countries, women do not have the legal right to open bank accounts, sign contracts, own property, or initiate legal proceedings without a husband’s consent. 75 percent of countries in Francophone Africa have regulations restricting women’s employment and 12 countries in the Spanish-speaking countries have decrees prohibiting female employment in some sectors. In half of the countries we studied, when legal impediments to women undertaking economic activities were reduced, their labor force participation rose by at least 5 percentage points in the following 5 years.
We know that it takes only a few strong but persistent voices to change these inequities – it happened in India, with Dr. Hansa Mehta, who helped pushed through the Sarda Act that forbade child marriage, championed better educational opportunities for girls, and put in place personal law reforms.
There is a role for the private sector as well. To start with, businesses can promote gender equity by ensuring equal pay for equal work. Even where governmental regulations do not mandate it, firms can take the initiative to put in place work-life policies that support women’s labor force attachment including through mentoring and leadership opportunities, flexible schedules, travel and childcare subsidies, and zero tolerance towards workplace harassment.
It is estimated that in developing countries, 70 percent of women-owned businesses are under-served by financial institutions, as a result of which women entrepreneurs run smaller enterprises, earn less than male peers and are more likely to fail. This is a financing gap—as well as a lost business opportunity—in which the financial industry can step up to aid women’s financial inclusion.
And finally, we at the international organizations also have a role in this endeavor. The United Nations has declared gender equality among the 17 Sustainable Development Goals (“SDGs”) to achieve inclusive growth by 2030. At the IMF, we have increased our emphasis on women’s empowerment through training, technical advice, and peer-learning workshops with country authorities. I am also proud to note that we at the IMF have worked hard to diversify our leadership, successfully raising female directorship to over 30 percent, appointing the IMF’s second consecutive female Managing Director, and its first female Chief Economist. Gender equality is an aspect of the job I take very seriously and during my tenure I have increased the number of women in leadership positions in my own Department.
Let me now conclude by saying that this crisis has demonstrated the excellent contributions of women as leaders, as health professionals, as first-responders, as care givers. Yet women have been hit disproportionately hard by this crisis, and we still have a distance to go to get to gender equality. While much remains to be done, I am confident we will continue to make important progress towards the empowerment of women everywhere in the world.
Some 100 years ago this was the dream of a woman from a small town in India who we are honoring today. I hope this generation’s leaders and policymakers will take every opportunity they get to honor Dr. Hansa Mehta’s legacy through urgent and determined action for greater gender equality.
Thank you.
Compliments of the IMF.
The post IMF | Women’s Economic Empowerment and Inclusive Global Economic Growth: COVID-19 and Beyond first appeared on European American Chamber of Commerce New York [EACCNY] | Your Partner for Transatlantic Business Resources.

Ahead of International Women’s Day, the Commission published its 2021 report on gender equality in the EU, that shows the negative impact of the COVID-19 pandemic on women. The pandemic has exacerbated existing inequalities between women and men in almost all areas of life, both in Europe and beyond, rolling back on the hard-won achievements of past years. At the same time, gender equality has never been so high up on the EU’s political agenda, and the Commission has made significant efforts to implement the Gender Equality Strategy, adopted one year ago. To better monitor and track progress in each of the 27 Member States, the Commission is launching today a Gender Equality Strategy Monitoring Portal.
Vice-President for Values and Transparency, Věra Jourová, said today: “Women are at the frontline at the pandemic and they are more affected by it. We can’t afford sliding back; we must continue to push for fairness and equality. This is why EU has put women at the heart of recovery and obliged Member States to include gender equality in investments funded from Recovery and Resilience Facility.”
Commissioner for Equality, Helena Dalli, added: “Despite the disproportionate impact on women’s live due the COVID-19 crisis, we need to use this situation as an opportunity. We are determined to strengthen our efforts, continue progressing and not allow a backlash on all the gender equality gains made”.
COVID-19 impact on women
Today’s report highlights how the COVID-19 pandemic has proven to be a major challenge for gender equality:

Member States recorded a surge in domestic violence: For example, the number of reports on domestic violence in France increased by 32% during the first week of the lockdown, in Lithuania by 20% in the first three weeks. Ireland saw a five-fold increase in domestic violence orders and Spanish authorities reported an 18% rise in calls during the first fortnight of confinement.

Women were at the frontline tackling the pandemic: 76% of healthcare and social-care workers, 86% of personal care workers in health services are women. With the pandemic, women in these sectors saw an unprecedented rise in workload, health risk and challenges to work-life balance.

Women in the labour market were hit hard by the pandemic: Women are overrepresented in sectors that are worst affected by the crisis (retail, hospitality, care and domestic work), because these jobs cannot be done remotely. Women also had more difficulties re-entering the labour market during the partial recovery last summer 2020 with employment rates rising by 1.4% for men but only by 0.8% for women between the second and the third quarter 2020.

Lockdowns have significant impact on unpaid care and work-life balance: Women spent, on average, 62 hours per week caring for children (compared to 36 hours for men) and 23 hours per week doing housework (15 hours for men).

A striking lack of women in COVID-19 decision-making bodies: A 2020 study found that men greatly outnumber women in the bodies created to respond to the pandemic. Of 115 national dedicated COVID-19 task forces in 87 countries, including 17 EU Member States, 85,2% were made up mainly of men, 11.4% comprised mainly women, and only 3.5% had gender parity. At the political level, only 30% of health ministers in the EU are women. The Commission’s task force for the COVID-19 crisis is led by President von der Leyen and includes five other Commissioners, three of whom are women.

Despite the challenges arising from the COVID-19 crisis, the Commission made significant efforts to move forward with the implementation of the Gender Equality Strategy over the past year. In order to track progress more effectively across the EU, the Commission launched today the Gender Equality Strategy Monitoring Portal. A joint project developed by the Commission’s Joint Research Centre and the European Institute for Gender Equality (EIGE), the portal will allow to monitor individual EU Member States’ performance and compare that performance among the 27 Member States.
Background
The Gender Equality Strategy 2020-2025, adopted one year ago, is based on a vision for a Europe where women and men, girls and boys, in all their diversity, are free from violence and stereotypes and have the opportunity to thrive and to lead. It sets out key actions for the 5-year period and commits to ensure that the Commission will include an equality perspective in all EU policy areas.
In the past year, the Commission has stepped up fight against gender-based violence with the first-ever EU victims’ rights strategy and announced a proposal to combat gender-based violence (public consultation is open here). The proposal for a Digital Services Act, adopted in December 2020, clarifies platforms’ responsibility and contributes to address online violence.
The Commission has taken action to encourage women’s participation in the labour market. The Action Plan to implement the European Pillar of Social Rights puts gender equality at its core and establishes, amongst others, ambitious targets for women’s participation in the labour market and the provision of early childcare. On 4 March, the Commission put forward pay transparency measures to ensure equal pay for women and men for equal work.
In the Digital Education Action Plan and Updated Skills Agenda, the Commission announced a range of actions ensuring that girls and young women are equally present in ICT studies and digital skills development.
A gender equality perspective was also included into the next EU budget. Moreover, the new Recovery and Resilience Facility under the NextGenerationEU requires Member States to explain how their national recovery plans will contribute to promoting gender equality, thus helping to ensure a gender-responsive recovery in the EU.
In the past year, the Commission continued to support initiatives tackling gender stereotypes through its funding programmes, including the EU’s Rights, Equality and Citizenship programme. The Commission also strengthened gender equality outside of the EU by presenting, in November 2020, the new Gender Action Plan (GAP III) for 2021-2025, an ambitious agenda for gender equality and women’s empowerment in EU external action.
Today, the European Institute for Gender Equality (EIGE) published a report on the Covid-19 pandemic and intimate partner violence against women in the EU. Full details can be found in their press release.
Compliments of the European Commission.
The post International Women’s Day 2021: COVID-19 pandemic is a major challenge for gender equality first appeared on European American Chamber of Commerce New York [EACCNY] | Your Partner for Transatlantic Business Resources.

March 01, 2021 | WASHINGTON |
The Office of the United States Trade Representative today delivered President Biden’s 2021 Trade Agenda and 2020 Annual Report to Congress, detailing a comprehensive trade policy in support of the Administration’s effort to help the U.S. recover from the COVID-19 pandemic and build back better.
The President’s agenda will create millions of good-paying jobs and support America’s working families by tackling four national challenges: building a stronger industrial and innovation base so the future is made in America; building sustainable infrastructure and a clean energy future; building a stronger, caring economy; and advancing racial equity across the board.
The President wants a fair international trading system that promotes inclusive economic growth and reflects America’s universal values. Trade policy must respect the dignity of work and value Americans as workers and wage-earners, not only as consumers. The President’s trade agenda will restore U.S. global leadership by combatting forced and exploitative labor conditions, corruption, and discrimination against women and minorities around the world.
Through bilateral and multilateral engagement, the Biden Administration will seek to build consensus around trade policies that address the climate crisis, bolster sustainable renewable energy supply chains, level the playing field, discourage regulatory arbitrage, and foster innovation and creativity.
The full report can be viewed here.
A fact sheet outlining key highlights of the report is available here.
Background:
The 2021 Trade Policy Agenda and 2020 Annual Report of the President of the United States on the Trade Agreements Program are submitted to the Congress pursuant to Section 163 of the Trade Act of 1974, as amended.
Compliments of the Office of the United States Trade Representative. 
The post USTR | Biden Administration Releases 2021 President’s Trade Agenda and 2020 Annual Report first appeared on European American Chamber of Commerce New York [EACCNY] | Your Partner for Transatlantic Business Resources.