Monthly Archives: March 2017

Economic opportunity

Investing in access to essential services and reducing the gap in labor-force participation rates could significantly expand the global economy by 2025.

In 2015, the McKinsey Global Institute published The power of parity: How advancing women’s equality can add $12 trillion to global growth. This report, which focused on the enormous potential associated with narrowing the gender gap, found that if every country did so at the same historical rate as the fastest-improving country in its regional peer group, the world could add $12 trillion to annual gross domestic product in 2025. That’s some 11 percent higher than it would be under the business-as-usual scenario.

So what will it actually take to turn this potential into reality? Our new discussion paper, Delivering the power of parity: Toward a more gender-equal society, provides an agenda for action and investment, quantifying the progress needed on 15 gender-inequality indicators. It finds that while much of the $12 trillion opportunity comes from advancing gender equality in the world of work, progress there is closely tied to tackling gender gaps in society more broadly. In particular, improved access to services in six areas could unlock economic opportunities for women: education, family planning, maternal health, financial inclusion, digital inclusion, and assistance with unpaid care.

A new perspective on income inequality

The real incomes of about two-thirds of households in 25 advanced economies were flat or fell between 2005 and 2014. Without action, this phenomenon could have corrosive economic and social consequences.

Most people growing up in advanced economies since World War II have been able to assume they will be better off than their parents. For much of the time, that assumption has proved correct: except for a brief hiatus in the 1970s, buoyant global economic and employment growth over the past 70 years saw all households experience rising incomes, both before and after taxes and transfers. As recently as between 1993 and 2005, all but 2 percent of households in 25 advanced economies saw real incomes rise.

Yet this overwhelmingly positive income trend has ended. A new McKinsey Global Institute report, Poorer than their parents? Flat or falling incomes in advanced economies, finds that between 2005 and 2014, real incomes in those same advanced economies were flat or fell for 65 to 70 percent of households, or more than 540 million people (exhibit). And while government transfers and lower tax rates mitigated some of the impact, up to a quarter of all households still saw disposable income stall or fall in that decade.