A Model for Gender Analysis with Informal Production and Financial Sectors

Abstract

This paper presents an Overlapping Generations Model of economic development for gender and growth analysis in a low-income country environment. In addition to the formal sector the model considers informal production, which in the absence of barriers to entry, accounts for an increasingly large share of aggregated output in Sub-Saharan Africa. The model also accounts for financial market imperfections and its disproportionately larger adverse effects on women's access to credit. Policy experiments derived from an application of the model to Burkina Faso yield interesting results. In particular, a reduction in the cost of borrowing, increased women's bargaining power and higher public spending on education are growth-enhancing. Empirical evidence from the model shows that these policies are also welfare-enhancing and growth-inclusive as they tend to narrow gender gaps in economic well-being and strengthen women's economic empowerment.