Gender equality at a crossroads: institutions, growth and innovation
In a recent article (1), Peter Szilagyi, EDHEC Professor, and his co-authors contribute to the debate on the economic consequences of gender inequality in the European Union by studying the interrelationships between growth, innovation and institutions.
The latest Haut Commissariat à l'Égalité (2) report on sexism in France shows that the share of women who believe it is more difficult to be a woman has increased to 94% (in 2025 then) from 80% in 2023. The report also highlights that while gender issues have become more visible in public discourse, they have also become more polarized and contested.
This aligns with broader developments beyond France, from rollbacks in women’s workplace protections and reproductive rights in the U.S. to anti-gender ideology movements in Europe that challenge gender equality efforts. In my own home country of Hungary, the Orbán government has banned university gender studies programs (3), arguing that they were ideologically motivated.
Gender inequality, however, remains a pressing challenge not only from a social justice perspective but in terms of economic outcomes (4). When women face barriers to education and career advancement, the economy loses out on a significant portion of its talent pool (5). These barriers do not prevent demographic decline either. In fact, a recent IMF report shows that political and institutional efforts to narrow gender gaps can actually serve as a stabilizing factor in the demographic trends of advanced economies (6).
Our recent research with my Korean colleagues Hyun‐Jung Nam and Doojin Ryu, published in European Financial Management (1), contributes to the debate on the economic consequences of gender inequality in the 27 EU Member States.
We first establish the well-known fact that strong country-level institutions as measured by the World Bank’s Worldwide Governance Indicators (7) boost GDP, trade and foreign direct investment.
We then show that one channel through which they do so is by reducing gender gaps as identified by the UNDP’s Human Development Report (8).
Surprisingly, however, we find no positive link between a country’s innovation output as measured by the number of patents registered annually, and either strong institutions or gender equality. This is an issue because while GDP or trade growth provides immediate economic benefits, innovation is key for long-term sustained growth, competitiveness and resilience.
To explain this last finding, we disaggregate gender inequality into labor market participation and educational enrollment, leading to eye-opening results. We find that strong institutions only reduce labor force inequality, but not educational inequality. This is unsurprising in itself given that – regardless of a country’s quality of institutions – gender gaps in education, at least in enrollment figures, have largely closed or even reversed across the EU.
However, we then find that innovation is unrelated to labor market inequality, but remains strongly negatively related to educational inequality. In other words, our results suggest that simply integrating women into the workforce does not drive innovation – it is their educational integration that then leads to high-skill workforce participation that does.
We are now working on a follow-up study to shed further light on the underlying mechanisms.
The lesson from our findings so far appears clear: gender equality must remain a central policy concern if policymakers truly care about innovation and long-term sustainable growth in an increasingly competitive global economy. An educated workforce drives technological advancement, entrepreneurship and economic transformation. While progress has been made in closing labor market gaps, policymakers must also prioritize policies that address educational disparities.
If women lack equal access to education and skill-building, or even face field-of-study segregation that prevents them from then entering innovation-driven high-impact sectors, the EU will not be able to unlock its full economic and innovative potential.
References
(1) Nam, H.-J., Ryu, D., & Szilagyi, P. G. (2025). Gender inequality, institutional quality and economic outcomes in the European Union. European Financial Management, 31, 463–492 - https://doi.org/10.1111/eufm.12508
(2) Travaux du HCE. Rapport 2025 sur l’état du sexisme en France - A l’heure de la polarisation (20 janvier 2025) - https://www.haut-conseil-egalite.gouv.fr/stereotypes-et-roles-sociaux/travaux-du-hce/article/rapport-2025-sur-l-etat-du-sexisme-en-france-a-l-heure-de-la-polarisation
(3) The Hungarian Ban on Gender Studies and its Implications for Democratic Freedom (2019) Harvard Journal of Law & Gender - https://journals.law.harvard.edu/jlg/2019/01/the-hungarian-ban-on-gender-studies-and-its-implications-for-democratic-freedom/
(4) Economic Inequality by Gender (2024). Esteban Ortiz-Ospina, Joe Hasell and Max Roser. Our World In Data - https://ourworldindata.org/economic-inequality-by-gender
(5) Global Gender Gap Report 2023. World Economic Forum - https://www.weforum.org/publications/global-gender-gap-report-2023/in-full/gender-gaps-in-the-workforce/
(6) Promoting Gender Equality and Tackling Demographic Challenges (2024) By Jiajia Gu,
Lisa L Kolovich, Jorge Mondragon, Monique Newiak, Michael Herrmann. International Monetary Fund - https://www.imf.org/en/Publications/gender-notes/Issues/2024/06/10/Promoting-Gender-Equality-and-Tackling-Demographic-Challenges-549916
(7) Worldwide Governance Indicators, World Bank Group - https://www.worldbank.org/en/publication/worldwide-governance-indicators
(8) Human Development Report 2023-24. Breaking the gridlock: Reimagining cooperation in a polarized world (2024) UNDP-HDR - https://hdr.undp.org/content/human-development-report-2023-24
Photo by Hermann Wittekopf - kmkb via Unsplash
