Sunday, January 11, 2015

Gender inequality and social democratic policy

Image: A seahorse couple. Seahorses are very unusual in that males, not females, carry offspring through pregnancy and give birth. Thus, much of the following analysis will not apply to seahorses. (source)

For decades, the Scandinavian social democracies have led the world in limiting gender inequality. Currently, the World Economic Forum's Global Gender Gap report--which looks at several areas of women's status, including labor market indicators and the number of female representatives in government--ranks the Scandinavian social democracies very high. Four of the five Scandinavian social democracies take the top four spots; Denmark, the laggard, still finishes in the top ten at #8. Clearly, social democratic policy is effective in helping to limit gender inequality, and this post will broadly outline some social democratic strategies--universal child care and paid parental leave--and the evidence behind them.

This is a social policy blog, so I'm narrowly focusing on the policy basis of gender inequality. But it's important to note that sexism and discrimination have many causes and social policy can only be one medicine that cures a sick society. Confronting the economic roots of discrimination can only go so far. For example, women are disproportionate victims of violence. American men work about 10 hours more per week in paid employment, but women do so much housework that they have on average 5 fewer hours of leisure each week. Addressing the societal perpetuation of sexism in the workplace and beyond cannot simply be the sole responsibility of social policy. Aggressive enforcement of anti-discrimination laws and challenging everyday discrimination is also necessary. Social policy can only take us so far.

The economic case for sexism
In a fascinating article, Gwynn Guilford presents a very clear case about the economic incentives for sexist hiring and promotion practices, and the role of social democratic policy in fighting gender inequality. First, she addresses employers' economic incentives to pay women less than men, and to favor men for promotions:
For the vast majority of women who don’t return to work after giving birth, this is because the costs of returning—both financial and psychological—outweigh the benefits.

Here are the factors they’re likely weighing. Since it’s assumed the mother will take a long leave after giving birth, businesses systematically underpay women and skip them for promotions in favor of their male colleagues. Their husbands, therefore, likely have a much higher salary and aren’t eligible to take much more than a few weeks, at most, of paid childcare leave.

So women have little choice but to take many months off work to care for their newborn. Even in countries with robust maternal employment protections, low-skilled women in particular still face pressure to quit their jobs. Many who consider returning to work once their child is old enough for daycare struggle to find a job that pays well enough to cover childcare—or, with their skills now outdated, to find a job at all. Highly educated women, meanwhile, often find that taking a lengthy leave jolts them off the management track. And since this group tends to have wealthier husbands, without the professional motivation, there’s no point in returning.
Much evidence supports this argument. Danielle Kurtzleben summarizes research showing that American employers really do penalize women but not men for having children.

Guilford misses another reason women often drop out of the labor force: most human societies expect women, not men, to care for elderly or disabled relatives who are not able to care for themselves. This contributes to the gender pay gap for similar reasons. Another key issue (which she takes up outside this block quote) is that many women only work part-time after they have a child.

Putting this all together, we're really interested in three statistics--the gender pay gap, or the ratio of men's to women's wages; a comparison of the female and male labor force participation rate (the number of employed people as a percentage of working age adults); and a comparison of percentage of employed women and men working part time.

It's particularly important to keep track of all three because none can fully capture women's opportunities in the labor market. Two examples will make this clear. First, an increase in the gender pay gap can actually mean that the labor market is becoming less discriminatory towards women. Though counterintuitive, this can occur because these three measures are not independent. For example, the Scandinavian social democracies actually have a larger gender pay gap than countries with much more sexist labor markets, like Italy. The gender pay gap in Italy is so low because the Italian female labor force participation rate is very, very low. This low female labor force participation rate occurs because it's so difficult for Italian women to find employment that only the most highly skilled Italian female workers are reliably employed. In other words, most Italian jobs are low skill, but most women who have jobs in Italy are physicians, lawyers, or in other high skill fields where pay is high; there aren't many low skill female workers with jobs because they are unable to find work. Hence, high wage workers are grossly overrepresented in the female labor force, thus artificially decreasing the gender pay gap.

For a second example, the United States has traditionally had a surprisingly high female labor force participation rate. This is certainly due to a much higher poverty rate. Thus, for the United States, the labor force participation and part time work rates alone are likely to be misleading. Clearly, we need to consider all three measures to get an accurate picture.

In any case, in every country on earth, these measures are heavily weighted against women. Guilford summarizes research that suggest that unprecedented rates of economic growth could occur if the female labor force participation rate rose to that of men--there's simply so much bottled up talent and productivity in the world's women that can't be put to use because of sexism.

Using social policy to address economic roots of sexism
It should be very obvious that social policy can address each of the three root incentives for gender discrimination in hiring, pay, and promotions. Parental leave policies can be structured to encourage fathers to take parental leave, diminishing employers' incentives to pay women less. Universal child care services make it easier for women to return to work when babies become toddlers. Universal long term care services ensure that elderly relatives who are no longer able to care for themselves receive competent care even if their adult daughter or daughter-in-law returns to work. This isn't a new idea. Since the 1970's, the social democracies have implemented these policies with the stated intention of maximizing female labor force participation.

But do these policies actually work? Have countries that have implemented these policies actually seen an improvement in our three indicators of workplace discrimination? Let's take a look:

Universal child care and female employment
No one disputes that there is an extremely strong correlation between child care policies and female labor force participation rate. Countries with universal child care programs have much higher female labor force participation rates (the introductions of the four studies linked to in the next paragraph summarize this research well).

However, demonstrating or ruling out causality is impossible in social science. So many factors that affect macro-level employment and pay that it's nearly impossible to assess the impact of any policy. Studies of the effects of child care on female employment and pay have relied on natural experiments--for example, where a single state expands child care coverage and a nearby state can be used as a control. Such natural experiments don't occur often, but researchers have managed to find a few to take advantage of. Such studies of Quebec and Norway (for toddlers) in the 2000's found extremely strong, positive effects on female labor force participation rates when child care was expanded. But studies of the Netherlands in the 2000's and Norway (for children aged 3-6) in the 1970's found very weak, if any, effects.

So, at best, the evidence is inconclusive. But there's good reason to doubt the utility of these studies anyway. For example, the natural experiment that occurred in Norway in the 1970's only lasted for three years: the federal government committed itself to expanding child care in all states, but certain states received this new funding three years later than others. In other words, the researchers were only able to study the effects of increased child care access on female labor force participation for just three years. According to their conclusions, the expansion of child care services simply crowded out informal child care arrangements that mothers were already using. The study in the Netherlands is over a similarly short time period, and it's by no means clear that the labor markets would adjust to changes in child care policies over such a short period of time. Women who have already told their employer they are not returning might have no job to return to, and a slack labor market could mean that women who want a job aren't immediately able to find one. It's also fair to point out that none of these studies have the ability to account for sexist hiring practices in the private sector. If women are suddenly able to work because of the increased access to child care but no employer wants to hire them (or give them a raise), then child care services are necessary but not sufficient for addressing workplace sexism.

The study in Norway in the 2000's is more confusing still, as it tracks female labor force participation rates as federal funding for toddlers increased continuously over a seven year period. The Quebec study was able to examine changes to female labor force participation rates over a ten year period through 2008 following a 1998 law that increased access to child care. This is probably the strongest study methodologically, and it found very strong, positive results. In fact, the estimated effects were so strong that the increased taxes resulting from the higher female labor force participation was enough to pay for the full cost of the child care expansion. Nevertheless, it's most fair to say that the evidence on the effects of universal child care on female labor force participation rate is inconclusive. And, evidence on the effect on the gender wage gap is even more sparse.

In sum, the social science evidence is inconclusive due to a paucity of natural experiments and the impossibility of demonstrating causality. Nevertheless, over several decades, the countries with the most generous child care policies have built labor markets with the highest female labor force participation rates. If child care policies can't explain this, then what can? There's simply no competing plausible explanation for why the countries with the most generous child care policies have the highest female labor force participation rates.

Sweden, for example, achieved the highest female labor force participation rate in the world for several decades. Esping-Andersen uses data on utilization of universal paid maternal leave* and universal child care policies to argue that such high labor force participation rates are impossible without significant investment in social welfare. For example, he points out that the female labor force participation rate for women with children aged 0-2 was nearly equal that of the general female population. However, on any given day, about half were absent from work, utilizing paid maternal leave time. Even if social science can't show causality, it's difficult to see how Sweden could have achieved such high female labor force participation without maternal leave and child care policies.

Parental leave for men
A much later social policy innovation aimed at reducing gender inequality is structuring parental leave policies to encourage men to take leave. Guilford and many others argue that this approach is the best next step to achieving gender equality. Guilford explains:
Why wasn’t it working? It turned out that allowing parents to choose how to divvy up childcare time didn’t much change the existing incentives. As Bengt Westerberg, who was deputy prime minister in 1995, told the New York Times, Swedish women faced a vicious cycle. Since women’s pay was at that time typically much lower than their husbands’, couples typically opted for the mother to stay at home with the child. But that perpetuated the pay gap, as women continued to be “mommy-tracked,” penalized for the possibility that they’d bear a child. Companies entrenched this divide by looking down on fathers who did take parental leave...

So in 1995, the government rolled out “daddy leave.” It didn’t make paternity leave mandatory, but couples lost a month of subsidized leave if the father took less than a month off. That meant he could no longer transfer all of his leave to his wife. The new policy also compensated fathers and mothers at 90 percent of their wages, making it harder for fathers to turn down.

And it worked. Within a few years, more than four out of every five fathers stayed at home. And when the government added another month to “daddy leave” in 2002, the amount of time they took off more than doubled...

Now nine in 10 Swedish fathers take leave, for an average of three to four months each, accounting for a quarter of total leave time taken[.]
So there's no question that the policies have been successful in getting men to take more parental leave time. But have these policies actually had an effect on workplace discrimination?

Again, we run into the same problem of attempting to demonstrate causality in social science research. In the early 1990's, Sweden's economy was thrown into disarray by a severe recession, so researchers attempting to assess the effects of a 1995 policy have the unenviable (or impossible) task of disaggregating the effects that the recession had on the labor market. Guilford's take:
What happened as a result? The issue is still controversial, but it seems that the longer the leave for fathers, the less time women take out from the job market. A study by the Swedish Institute of Labor Market Policy Evaluation in 2010 found that a mother’s future earnings rose 7 percent, on average, for each month of parental leave her husband took. Sweden now has some of the highest rates of working mothers in the world, with around nine-tenths of mothers returning to work after childbirth. While some economists have worried that Sweden’s generous leave benefits (in addition to daddy leave) would penalize women, that hasn’t happened. Research shows that younger female workers face virtually no discrimination.

This doesn’t mean Sweden doesn’t have farther to go. Thanks in part to the disproportionate number of male physicians and its robust finance industry, Sweden’s pay gap is still relatively high. And as with everywhere else in the developed world, women also work part-time at higher rates than men...

However, Sweden’s part-time work gender gap is much smaller than that of other countries. And unlike pretty much any other country, Swedish women who work part-time are paid at the same rate as those who work full-time, according to a 2008 study; some even enjoy a small pay premium.
The difference between Sweden and other countries, said the researchers, was that many of the Swedish women working part-time were still doing the same job they had in the past—and the same one to which they would return full-time after their children entered school. To put it another way, Sweden’s policies made it easier for parents to balance work and family responsibilities.
(Also, 2004 study found that the number of Swedish women working full time jobs increased steadily in the late 1990's, though the gender pay gap increased or at best remained constant.)

It would seem logical that if the Swedish government expanded "daddy leave" to half of the 16 months allotted to each couple, the labor force participation and gender pay gaps should disappear.

Iceland has also experimented with incentivizing paternal leave, with striking effects:
In the early 2000s, Iceland expanded parental leave to nine months, with a daddy quota of three months. Last year, Iceland granted each parent five months’ leave, with two months split however they choose. Though we’ll have to wait to see how that plays out, as of 2010, 95 fathers there took leave for every 100 mothers that did. The fathers used roughly a third of the total parental leave taken, compared with just 3 percent in 2000.
While the effects of paternal leave policies on female employment are still unclear, it's unquestionable that men's and women's roles in society have changed. When--in response to policy incentives--men start taking more and more responsibility in caring for their children, it is clear that these policies play a crucial role in dismantling traditional gender roles.

Once again, Guilford's article is well worth reading in full.

The human case for child care and paternal leave
The evidence for the effects of universal child care and parental leave on our three indicators of female employment are inconclusive. This doesn't implicate weaknesses in policy, but rather weaknesses in social science generally. All social science is at least somewhat inconclusive; finally confirming or ruling out causality in social science research is impossible.

But employment indicators are not the only important indicators, or even the most important indicators. Wherever universal parental leave, long term care, or child care policies are implemented, they are extremely popular and utilized by nearly everyone who is eligible. Clearly, these services are meeting a very real need. Without doubt, these policies make women's lives better by easing overburden society places upon them. By enacting policies that aim to improve the lives of women, society takes a stand against sexism and discrimination. All of this is worth pursuing for its own sake.

If the researchers of the Quebec study are correct, then child care policies result in so much extra taxes being paid that they pay for themselves. But even if they don't, that doesn't mean the other positive outcomes of these policies aren't worth pursuing.

*Esping-Andersen argues that maternal leave policies were essential for increasing Sweden's female labor force participation rate. Since we don't really face this problem in the United States, I haven't covered that topic here.

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