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Impact of Financial Crisis on Women and Families

PREM Gender and Development, World BankFebruary 2009

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3 Main Messages

Effects on women and children, if ignored, will both increase current poverty and imperil future development.

Effective policy responses should build on women’s roles as economic agents.

The financial crisis will have gender-specific impacts.

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ImpactsImpacts

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The crisis has first and second round impact on women and families

Drop in aggregate

demand/ exports

Tightenedcredit

markets

Drop inremittances

Food priceshocks

Impact 1:Loss of

employment

Impact 2:Fall in MFI

lending resources

Drop inhousehold income.

Increased riskof poverty

Impact 3:Vulnerable hhd coping strategies

First round impactsFirst round impacts Second round impactsSecond round impacts

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Impact 1: Women workers in export industries lose jobs

Export Manufacturing

More than 50%

ElectronicsPhilippines

85%GarmentsBangladesh

78%GarmentsMalaysia

% of workforce

female

IndustryCountry

More than 50%

ElectronicsPhilippines

85%GarmentsBangladesh

78%GarmentsMalaysia

% of workforce

female

IndustryCountry

High Value Export Agriculture% of

workforce female

IndustryCountry

80%FruitsThailand

70%Cut flowerEcuador

85%Cut flowerUganda

% of workforce

female

IndustryCountry

80%FruitsThailand

70%Cut flowerEcuador

85%Cut flowerUganda

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Impact 2: Tightening credit markets can squeeze MFI loans to women producers

MFIs typically lend to women:

Over 3,330 MFIs reached 133 million clients in 2006

93 million of the clients were among the poorest when they took their first loan

85% of these poorest clients were women

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Drop in remittances lowers income available to HHS

-14% -12% -10% -8% -6% -4% -2% 0%

Afghanistan

Uzbekistan

Tajikistan

Kyrgyz Republic

Haiti

Cape Verde

Source: World Bank (2009)

Falling Remittances to Developing Countries (as % of GDP) Falling Remittances to Developing Countries (as % of GDP) 20082008--20092009

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HH Coping StrategyHHs send women to work

% C hange in Labor Force Part icipat ion ( 19 9 3 - 9 5) , Lat in A merican C risis

-3-2-10123

Argentina Brazil Mexico

Female

Male

% Change in Labor Force Participation (1997-99), East Asian Crisis

-3-2-10123

Indonesia Korea,Rep. Philippines

Source: WDI, 2008

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HH Coping Strategy HHs pull girls (and boys) out of school

Source: Gubert and Robilliard 2007; Jensen (2000); Skoufias and Parker 2006; Schady (2004).

Low income countries:Madagascar (fall in ag income) girls more likely to drop out of schools.Cote d’Ivoire (drought) enrollment decreased 11 pptsfor girls and 14 ppts for boys.

Middle income countries:Mexico (peso crisis) girls attendance fell by 8%, no impact on boys.Peru (1980s crisis) no impact on school enrollment for either girls or boys, schooling increased.

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HH Coping Strategy HHs cut back on health investments,

affecting girls disproportionately

Source: Baird, Freedman and Schady, 1998

Data from 59 developing countries, different years ranging from 1985 to 2004

Girls’ (IMR) exceeds boys’ during economic downturns

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Policy implicationsPolicy implications

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Priority Investment:Put income in women’s hands in poor hh

because….

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…because loss of women’s earnings can have long-term welfare impacts

Loss of employmentfor women in export oriented industries

Microfinance likely to be affected

(MFI borrowers are typically women)

Drop in current poverty reduction

and economic growth

Greater impact onwell-being of

children

Drop in future povertyreduction and

economic growth

Fall in women’s control over household decisions

Drop infemale

earnings

Fall in remittances

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...because income transfers to women have larger effects on children’s nutritional status than similar transfers to men.

Source: Thomas (1990) for Brazil, Khandker (1998) for Bangladesh, and Duflo (2003) for South Africa.

-20

0

20

40

60

80

100

Brazil Bangladesh South Africa

% c

hang

e in

chi

ld's

an

thro

pom

etric

mea

sure

Woman's income Man's income

Children’s weight for height

Children’s height for age

Children’s height for age

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… because the effect of female borrowing on hh welfare is larger than the effect of male borrowing (e.g. Bangladesh)

Source: Khander (1998)

Impact of a 10% increase in borrowing from Grameen Bank

0.43

0.0150.18

-0.06

11.63

-4.92-0.2

0

0.2

0.4

0.6

0.8

1

Per Capita HH expend. Women's Labor Supply Girls' height for age

Perc

enta

ge c

hang

e

Borrowing by Women Borrowing by Men

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..especially in more than half in a sample of countries, where women are most

vulnerable to effects of the crisis.

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DeceleratingDeceleratinggrowthgrowth HighHigh ChildChild

MortalityMortality

Low Low gendergenderparityparity in in schoolingschooling

Women & girls in 50% of countries in the sample (of 90) face moderate to high exposure to negative impact of crisis

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BankBank’’s Responses Response

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Mapping impacts to policy

Capitalization of microcreditCapitalization of microcreditWomen producersWomen producers

Cash transfer programsCash transfer programsOther social safety net programsOther social safety net programs

Women and girlsWomen and girls’’human developmenthuman development

Employment generation programsEmployment generation programsWomenWomen’’s employments employment

Policy/programsImpacts

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Bank’s Response

World Bank Group’s Gender Action Plan will allocate its financial resources in 2009 to assist in ensuring that WBG responses to the crisis maximize women’s income, especially in those countries where women and girls are most vulnerable to the effects of the crisis.