Female Education Externality and Inclusive Growth

Education is generally believed to be beneficial in fostering, independent of gender, higher labor productivity. Female education may, however, cause other socio-economic gains which are not captured by higher wage or better compensation package for the educated female worker in the labor market (positive externality). This paper investigates the casual effect of enhancing female education and reducing gender education inequality on various measures of sustainable development. After addressing the endogeneity issue associated with gender education inequality employing a novel instrumental variable (IV), we find mitigating gender education inequality to be associated with lower infant mortality and poverty rates and improvements in health and environmental conditions. Our IV estimation result reports that a one-standard-deviation increase in the female-to-male ratio of average years of schooling is associated with a lower poverty rate by about 0.98 percentage points. The results indicate that expanding women’s educational opportunities is an effective way to promote inclusive growth.