Growing inequality of income and wealth has become a major global concern. In many countries inequality has been driven by weak earnings growth not only among the poor but also among groups across much of the income distribution, while earnings of the top 1 percent continue to rise dramatically.
A clear but often overlooked feature of this discussion is that the fantastic gains at the top of the distribution are almost entirely accruing to men. One reason it is overlooked is that income and wealth inequality are measured at the household level. But one person in the household typically earns and controls the money, and that person is almost always a man. The concentration of income and wealth in the hands of men should reinforce the call to undertake greater redistributive policies.
The Forbes billionaires list, a small group that controls 3 percent of global household wealth and whose total net worth amounts to about 9 percent of world GDP, highlights this issue.1 Female billionaires make up only about 10 percent of the total entries on the 2014 Forbes World Billionaires list (table 1). That the accumulation of extreme wealth is almost all by men is of concern for two important reasons.
First, social injustice—like inequality more specifically—foments discontent. The lack of diversity in the highly influential elite of each country means that its values and interests are especially unlikely to reflect those of the rest of the population.
A second issue is discrimination; an elite would be less worrisome if everyone has some chance (even if very small) to become members. The numbers suggest that such opportunities do not exist. Consider that in the United States, which has equal pay laws, GM’s new head, Mary Barra, is currently earning less than half her male predecessor did and less than he continues to earn as an advisor to the company. Overall, female executives among the top five earners in Standard & Poor’s 500 index companies are paid about 20 percent less than their male counterparts on average. And, to the extent that wealth reflects income derived from rents rather than extraordinary productivity, there also appears to be a men’s club. The sector most underrepresented by women on the list is rent-driven resources; of Russia’s 111 billionaires, only one is female,; and none of the Persian Gulf countries have even a single woman on the list.2 Resource-rich (yet more egalitarian) Canada and Norway do not perform any better.
New fortunes are especially likely to be made by men—only 3 percent of self-made billionaires on the list this year are women.3 This trend is unlikely to reflect a lack of creativity among women, as women tend to perform better in the sectors where superstars and globalization (the so-called winner-take-all industries, such as high-tech and consumer goods) are more important. These industries account for 43 percent of female self-made billionaires in 2014, compared with 33 percent of male self-made billionaires. On the other hand, women underperform the most in such sectors as resources and services, which rely on political connections for privatization rights and government permits, and often yield monopoly rents.
Even inherited wealth—the growth of which concerns the economist Thomas Piketty—overwhelmingly favors the boys. Given that girls represent on average half of firstborns and half of total offspring, inherited wealth should be equally allocated. However, globally, less than 30 percent of inherited billionaires are female. This suggests that parents either leave a larger share of their fortune to their male offspring or that men are more likely to grow and/or maintain a large inheritance.
The significantly higher rate of self-made male billionaires is consistent with men expanding fortunes more rapidly than women, but there is also evidence that female offspring are often overlooked worldwide. It is not just the patriarchal societies that record a low level of inherited wealth going to women. Of countries with at least five inherited fortunes, Egypt, Singapore, and Taiwan report none accruing to females, while Canada, the United Kingdom, and Italy also show little female inherited wealth. Consistent with preference for male offspring, studies of family businesses in countries as different as Denmark and Thailand show strong evidence of bias towards giving company ownership to men over women.4
The growing concentration of wealth in the hands of a few is itself disturbing. That these few are almost all men makes it even more so.
|Table 1 Gender and the superrich, 2014|
|Country||Female share of billionaires||Total billionaires||Female share of inherited wealth||Total inherited billionaires||Female share of self-made wealth||Total self-made billionaires|
|All 2014 billionaires||10.5||1645||29.3||492||2.6||1151|
|Hong Kong SAR||13.3||45||28.6||14||6.5||31|
|Source: Authors’ calculations using data from the 2014 Forbes World’s Billionaires list; reports data for individual countries with at least eight billionaires.|
2. Other oil rich countries with few female billionaires include Canada (1), Norway (0), and Venezuela (0).
3. We define wealth as inherited when the founder of the company associated with a current billionaire’s wealth is a relative of the founder, except in cases where the current billionaire’s inheritance was only a single store or factory. All other wealth is considered self-made.
4. See Morten Bennedsen, Kasper Meisner Nielsen, Francisco Perez-Gonzalez, and Danliel Wolfenzon, 2007, Inside the Family Firm: The Role of Families in Succession Decisions and Performance, Quarterly Journal of Economics 122, no. 2, 647–91; and Marianne Bertrand, Simon Johnson, Krislert Samphantharak, and Antoinette Schoar, 2008, Mixing Family with Business: A Study of Thai Business Groups and the Families Behind Them [pdf], Journal of Financial Economics 88, 466–98.