“The joke among insiders is that the initials of the International Monetary Fund actually stand for “it’s mostly fiscal,” a reference to the predilection of that organization to see all economic issues ultimately in terms of tax and expenditure policy.
“In an incisive speech on Monday, Heidi Crebo-Rediker, the chief economist at the United States State Department, challenged the I.M.F. to understand that women are central to the process of economic growth and development – and to place this fact at the center of how it interacts with member countries. (The State Department has posted a full transcript of the speech, which, along with a subsequent discussion, were held at the Peterson Institute for International Economics, where I am a senior fellow; I was not involved in organizing the event).
“By all indications, Ms. Crebo-Rediker will prevail in her discussions with the I.M.F., and this will be a very good thing. A more interesting question is how her points about the rising economic and political power of — and opportunities for — women will play out in the United States.
“At the event on Monday, far from pushing back against any of Ms. Crebo-Rediker’s suggestions, Minouche Shafik, deputy managing director at the fund, welcomed the approach and emphasized that the I.M.F. had already taken steps in this direction. It makes no sense to bias tax policy against women who work, yet that is what happens in a number of countries as Ms. Shafik emphasized (as an example, see this discussion of what is known as the marriage penalty in the United States). And expenditure policy can also make a big difference – think about parental leave or affordable and high-quality child care. By some estimates (based on Australian data), a 50 percent reduction in the cost of child care can increase the labor supply of young mothers by 6.5 to 10 percent.”
Read Simon Johnson’s full New York Times Economix Blog post here