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Econographics June 2, 2023

Only 11 percent of finance ministers and central bank governors are women

By Jessie Yin

“We can no longer consider it normal that 50% of our population is not present,” Spanish Minister of the Economy Nadia Calviño said after refusing to take a promotional photo at the Madrid Leaders Forum, where she was the only woman in the line-up. Calviño promised last year that she would no longer participate in events if she was the only woman present, to draw attention to the lack of equal representation in economics and business.

While some of the most powerful economic institutions in the world are led by women at the moment, Calviño is unfortunately right. With Kristiana Georgieva at the International Monetary Fund, Ngozi Okonjo-Iweala at the World Trade Organization, Christine Lagarde at the European Central Bank, and Janet Yellen at the US Treasury, we’re given the impression that women are at the helm of economic policymaking. However, this success has not translated into broad representation. Structural barriers continue to prevent many women from reaching top roles in finance and economics—and the problem is more pronounced than in other areas of policymaking.

A leaky pipeline

Of the 190 member countries of the IMF, 26 have women as finance ministers and only 17 have women as central bank governors. That means just 11.3% of policymakers in those two roles are women. The average proportion of women serving as cabinet ministers globally is meaningfully higher, at 22.8%. What is it about the economic portfolio that results in such a drop off?

The reasons for this disparity can be attributed to a variety of factors, such as male-dominance in the study of economics, barriers that prevent women from being promoted, and social perceptions of women’s abilities. These structural and social barriers create a “leaky pipeline,” where small gender gaps in participation at early stages can accumulate over time to result in large disparities at the top of institutions.

Economics requires mathematics and quantitative skills. However, girls often receive the message that they are not as competent in these areas from a young age. The lower participation of women and girls in STEM-related activities is well-documented, and similar patterns are present in economics. Across major US and European academic institutions, women represent around 35% of PhD candidates in economics. Women also tend towards more social research areas such as health, education, and labor while men dominate areas like economic theory, macroeconomics, and finance—the subfields from which top policy leaders are often drawn from. There is nothing preordained about these trends in specialization. They are driven by social expectations, gender biases, and a lack of role models.

However, educational differentials don’t fully explain the disparity. After all, while the role of finance minister or central bank governor requires experience with economics, that doesn’t have to include a PhD. We can look to US Federal Reserve Chair Jerome Powell and ECB President Christine Largarde (both lawyers) as examples of such exceptions.

Women are also held back by an array of barriers to promotion in big economic and financial institutions. Men are more likely to be promoted than their female counterparts with comparable qualifications. For example, the US financial sector employs around 9 million workers, with women comprising the majority of the entry-level workforce but holding less than a fourth of the top leadership positions. Women are impacted by the “motherhood penalty” caused by gendered expectations around parenting and work. This penalty can be exacerbated by a lack of parental leave, but even when leave is available, women use it more than men and are stigmatized for it. The promotional gap makes it more difficult for women in economics and finance to achieve the caliber of resume that candidates for finance minister or central bank governors usually have.

Finally, there is an unconscious bias against women’s ability to effectively conduct economic research and policy. As a whole, both men and women rate male applicants higher for positions that require quantitative skills, and female financial advisors are punished more severely for misconduct. Surveys in the US found that when central bankers were introduced without their credentials in a media announcement, people were more likely to doubt the commitment and ability of the Federal Reserve to balance inflation and employment if a woman was the spokesperson. Another study found a correlation between countries with high inflation and a lack of female central bank governors, and suggested that women are hindered by a bias that men are more “hawkish” and therefore more committed to fighting inflation.

Not a quick fix

In 2013, after over two years without a woman sitting on its six-member Executive Board, the ECB committed to a gender diversity action plan. At the time, only 14% of senior managers were women. The ECB’s action plan includes up to 20 weeks of paid parental/adoption leave for either parent and a target of a minimum 50% women in new hires across all levels of staff. As of the end of 2022, 38% at the senior managerial level are women. While 38% is not parity, it does represent a real increase as a result of the ECB’s diversity policies.

As President Lagarde said, “Being surrounded by men is not something new, but it is something that is always disappointing.” The barriers that women face aren’t new and neither are the suggested solutions. There is no magic pill for improving gender representation. Instead, there are a myriad of policies that tackle the different aspects of the “leaky pipeline.” From improving opportunities in education, to committing to equitable hiring practices, the approach to gender equality in economics must be holistic.

Jessie Yin is a Young Global Professional with the GeoEconomics Center.

At the intersection of economics, finance, and foreign policy, the GeoEconomics Center is a translation hub with the goal of helping shape a better global economic future.