This paper extends the debate about redressing persistent gender inequality in Australia by examining the relationship between labour productivity and the wage gap in all states and territories (1986–2013).

It is a critical case study as Australia’s widening gender wage gap is contrary to other developed nations. Using four different estimation methods, it is found that reducing the gap by 10% can boost per capita output up to 3%. To check the robustness of these findings, the effects of both physical and human capital were also controlled for.

The results suggest there exists a strong business case for eliminating the gender wage gap.

Given the tangible benefits to both equity and efficiency, such a goal should be of paramount importance for policy makers.

Tom Kennedy, Maria Rae, Alison Sheridan, Abbas Valadkhani, Reducing gender wage inequality increases economic prosperity for all: Insights from Australia, Economic Analysis and Policy, Volume 55, 2017, Pages 14-24, ISSN 0313-5926, http://dx.doi.org/10.1016/j.eap.2017.04.003.