GDP per capita by 2050 by 41%. In a set up that with both skilled and unskilled labor and CSC, average gains in output per person would amount to 39% (median 45% and Egypt 42%) if capital does not react, and 44% with full physical capital adjustment (median 51%, Egypt 47%). If we were to incorporate a conservative assumption for the projected change in the share of skilled labor, average gains would increase 11-12ppts, though gains in Egypt are 15ppts higher.

**Related Literature.** Apart from Pennings (2022), whose estimates we build upon in this study, there are three other studies that estimate the economic effects of closing gender employment gaps in MENA, although none of them focus on the region.<sup>2</sup> All of those studies report large economic benefits, though with different methodologies. One of the highest profile studies is produced by MGI (2015), who put the gains for MENA at 47% (“full potential” scenario in their exhibit 7), which are very similar to our long run estimates. Although their estimates are over a 10-year adjustment period, they actually reflect of a long-run steady state with fixed labor productivity.<sup>3</sup>

Cuberes and Teignier (2016) is the closest study to ours in terms of taking account of the skills distribution, though this paper takes an approach based on managerial talent in a Lucas (1978) span-of-control model rather than with capital-skill complementarities.<sup>4</sup> For MENA, they report almost identical gains from changes in employment rate (or participation) of around 50%, but an additional gain of 8% from fully utilizing female entrepreneurial talent.

The final paper is Ostry et al. (2018), who argues that male and female labor are partially complementary in production.<sup>5</sup> They report an increase in output in MENA from closing gender gaps of about 60%, which is about 5-10ppts higher than our long-run gains, though they do not include dynamics of effects via the skill distribution.<sup>6</sup> The rest of the paper is organized as follows. The next section revisits the results from Pennings (2022) for MENA, and simulates aggregate effects with and without adjustments in physical capital. Section 3 presents gains in output per person from the LTGM by 2050. Section 4 introduces capital-skill complementarities and studies potential distributional effects by examining the wages

> 2Devadas and Kim (2020), explore economic gains from closing gender gaps in the LTGM, including effects through TFP. They find that MENA is one of the regions with the largest gains.

> 3That is, MGI (2015) don’t allow for higher female employment to reduce capital per worker, and hence output per worker, in the short run. Although MGI (2015) include effects through equalization of hours and sectoral gender allocation, their estimates for MENA are mostly due to equalization of labor force participation (their Exhibit 6).

> 4Cuberes and Teignier (2016) report economic _losses_ of business-as-usual relative to a full-equality benchmark, rather than the economic _gains_ of full equality, relative business-as-usual. The long-run effects reported by Cuberes and Teignier (2016), CT%, are scaled up 1 _/_ (1 _− CT_ %) for comparability. However, the short-medium-run effects (with fixed capital) are difficult to compare directly.

> 5That is, a team of a man and a woman is more productive than a team of two men or two women (other things equal). Standard economic models, including ours, imply that the labor of men and women are perfectly substitutable. More specifically, Ostry et al. (2018) argue “the economically relevant range turns out to be one of partial substitutability, or, equivalently, partial complementarity...[elasticity of substitution] estimates are clustered below 1 in the macro data, between 1 and 2 in the sectoral data, and between 2 and 3 in the firm-level data.” (p6)

> 6These results are the average of gains with elasticity of substitution of 1.5 and 2 report in the top right corner of their Table 4.

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