A survey carried out in EU countries in 1998, which examined the work preferences of couples with small children, found that only one in ten couples supported the traditional male-only breadwinner model. There were a few exceptions. Yet, despite this finding, the survey also found that four out of ten couples depended on one breadwinner, usually with the man going to work.
This finding adds a key dimension to the debate about improving access to employment for women: not only might it help raise income levels and employment performance, as many economists claim, but it is what most women actually seem to want. So, although more women go to work today than 20 years ago in the OECD area, much more could be done to raise activity.
The question is how? Women across the developed world want to go out to work, but some countries do better than others at enabling them to do so. Some 80% of women aged 25-54 go to work in the Nordic countries and in some east European countries. But participation rates languish at around 65% in Ireland, Japan and Luxembourg.
The trouble is finding a common strand or an ideal policy model to follow, since countries with high female employment participation offer quite different explanations. Childcare appears important in all of them, but the question is who provides it and who pays? Sweden, for instance, is renowned for its generous family welfare, unlike the US, where welfare is more private. Yet, both countries have a high female labour participation rate. Meanwhile, Swedish women, like their US counterparts, tend to work full-time, but in Norway, part-time work is more normal.
Married women in Scandinavian countries have plenty in common, though. They tend to have generous subsidies for childcare, as well as sizeable child benefits, and generous paid parental leave. These advantages also apply to some extent in Austria and France, where full-time female participation is also prevalent.
This is not to say that encouraging part-time opportunities is not an effective policy. In fact, our research covering 17 countries over the period 1985-1999 shows that an increase in the availability of part-time work opportunities does indeed raise female participation. It can also offer young mothers in fulltime employment a period of respite, for instance, reducing their incentive to leave the workforce altogether if under pressure at home. So, even if the effect of childcare subsidies and parental leave is most striking for full-time work, childcare remains potentially important for all working mothers. In Japan and Australia, part-time work and a lower level of support for families with young children go hand in hand and participation tends to be a little lower as a result.
In other words, a high female participation rate can be achieved in different ways, though total hours worked may vary, depending on the emphasis on part-time work. This will clearly affect income levels.
The fact is that preferences for part-time and full-time work differ much across countries. The aforementioned EU survey of couples with young children found that part-time participation is the most preferred working arrangement in Germany, Ireland, the Netherlands and the UK, while full-time participation is preferred in Finland, Sweden, Belgium and France.
Family support can be too generous, though paid parental leave that keeps women out of the labour market for extended periods of time can end up reducing participation rates, as skills are lost and career paths and earnings interrupted. Our analysis suggests that any increase in paid parental leave beyond 20 weeks has a negative effect on women’s labour force participation. Also, child benefits, for the maintenance and care of children, appear to discourage particularly those women who would have worked part-time from joining the labour force, simply because they replace household income. They may be justified on grounds of equity, to reduce poverty, for instance, but if the goal is to encourage more female employment activity, then policies should probably aim to tilt the balance in favour of subsidising childcare, rather than staying at home. The policy mix really depends on what governments seek to achieve: higher labour participation, higher income levels, poverty reduction and greater financial independence for women are all legitimate goals.
A married mother’s decision to go to work is of course influenced by the tax and social security system. The tax treatment of second earners is less unfavourable compared with equivalent single earners in most Scandinavian countries, as well as in Austria, France and the UK, all of which have high participation rates. Clearly, where the tax rate of the second earner is high relative to equivalent single earners, the female participation rate will be low. This is the case in most countries. This is because when the woman goes out to work, she may lose a household allowance and, in some countries, the couple may have to give up income-based tax relief.
Childcare subsidies and tax cuts are costly. From an economic efficiency point of view, they may, however, be justified to reduce the high effective tax burden on mothers or when the wages of carers are relatively high compared with mothers’ own earnings. Also, if low-income mothers find it hard to borrow money, for instance, then some help to finance childcare may be needed. Subsidies should as much as possible be conditioned on work by the mother and targeted at lower-income mothers, who are more responsive to their net wage and also more constrained for liquidity. However, conditioning and targeting have to be managed sensitively, and balanced against children’s welfare and the need to reconcile work and family life.
Of course, the supply of childcare is also necessary for these stimuli to be effective. The responsiveness of childcare supply can be improved by lowering service market regulations (thereby facilitating the set-up of home-based childcare arrangements), while maintaining sufficient control over the quality of childcare. Interestingly, more relaxed immigration policies have contributed to a large pool of nannies in some countries.
Certainly, if higher participation is the aim, then social spending might not have to rise as sharply as some believe, as the US and Portugal have shown. Other factors are crucial. Cultural attitudes to work and to female work in particular, education levels of women, labour market conditions, fertility: all come into play. Could it be that a strong cultural work ethic is a major common factor explaining high full-time activity rates among women in the US and Sweden? The condition of the labour market is obviously paramount, for this conditions attitudes, confidence and incentives over time, and often demands constant policy attention. If rules and practices are open to work, then participation will likely rise; or if unemployment is low, women will generally be encouraged to join the work force.
So, which policies count most? In the end, a range of different policies can make a difference, though the evidence does suggest that well-functioning labour markets that do not block access to employment and generate opportunities for career development lead to higher female participation. And family-friendly practices are fundamental. After all, policies that ignore families also ignore the needs of working women. Education is also important, not just for skills, but because it raises ambitions and independence and may also tilt preferences towards full-time rather than part-time work. Again, these factors may explain high female participation rates in countries as diverse as the US and Sweden.
But the importance of childcare should not be underestimated. One conclusion from our study is that public spending on childcare tends to increase female participation. Even where private childcare is strong, the needs of lower earners have to be taken into account. It is of course possible that over time the market will deliver more affordable private childcare, but the evidence so far suggests that for now, some government support may be needed, such as through cofinancing.
In short, the policies that work best will be those that help women reconcile not just work with family life, but allow scope for personal ambition and development as well. That is what pro-active policies for women should be about.
Jaumotte, Florence (2003), “Female labour force participation: past trends and main determinants in OECD countries”, Economics Department Working Paper No 376, OECD.
Jaumotte, Florence (2003), “Labour force participation of women: empirical evidence on the role of policy and other determinants in OECD countries”, OECD Economic Studies No. 37, OECD.
©OECD Observer No 248, March 2005