DISCUSSION PAPER SERIES

IZA DP No. 17219

Closing the Gender Gap:

Promoting Labour Market Participation

Jorgen M. Harris
Eleonora Patacchini

AUGUST 2024
DISCUSSION PAPER SERIES

IZA DP No. 17219

Closing the Gender Gap:

Promoting Labour Market Participation

Jorgen M. Harris
Occidental College
Eleonora Patacchini
Cornell University, CEPR, and IZA

AUGUST 2024

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IZA DP No. 17219 AUGUST 2024

ABSTRACT
Closing the Gender Gap:
Promoting Labour Market Participation*
In many countries, a significant share of the gender earnings gap stems not only from firm’s
practices, or self-selection into lower productivity jobs, but also from a lower participation
among women. Inactivity around the age of motherhood is frequent including in the most
advanced countries, and can have lasting consequences on the chances to return to the
labor market, as well as future earnings and promotions. In this paper, we discuss the major
barriers reducing women’s labor force participation and examine the effects of several
policies aimed at overcoming those barriers: parental leave, reserved paternal leave, state-
funded childcare for young children, extended school hours, and individual taxation. For
each, we provide a brief discussion of policy design and effectiveness.

JEL Classification: J16, J13, J22

Keywords: economics of gender, child care, time allocation and labor
supply, labor market policy, maternal and paternal labor force
participation, gender norms

Corresponding author:
Eleonora Patacchini
Department of Economics
Cornell University
404 Uris Hall
Ithaca, NY 14853
USA
E-mail: [email protected]

* This paper was prepared as a chapter in the Handbook on Labour Markets in Transition, edited by Stephane
Carcillo and Stefano Scarpetta. We thank Jonathan Martelli for his excellent work as a research assistant.
1. Introduction

Women are less likely to be employed than men in almost all

countries, including high-income countries. While gender gaps in
employment are falling over time, progress is slow. While female
employment was 16 percentage points lower than male employment across
OECD countries in 2000, this gap had shrunk to 9.4 percentage points by
2021 (as shown in Figure 1).

Figure 1: Gender Gaps in Employment Rate in OECD Countries

2021 ( ) 2010 2000

Percentage points
55

45

35

25

15

-5

Note: This figure shows the percent of men employed minus the percent of women employed in OECD countries in 2000, 2010, and
2021, among individuals aged 15-16. Data for 2000 refers to 2002 for Croatia. This figure is adapted from Figure 13.1 in the OECD
report “Women at Work in OECD Countries” (Flutchmann and Patrini 2022). https://www.oecd-ilibrary.org/sites/152e4929-
en/index.html?itemId=/content/component/152e4929-en#chapter-d1e17348-76fd9fa03d
Source: OECD Employment Database.

While differences in the treatment of men and women in the workplace

contributes meaningfully to the gender earnings gap, a large portion of
the gap can be attributed to lower labor force participation of women,
particularly around the age of motherhood. Kleven et. al. (2019) estimate
that in six OECD countries, mothers’ long-run earnings decline relative
to father’s in the year that their first child is born. These earnings
declines are persistent—reducing earnings over 10 years by between 21%
(in Denmark) and 61% (in Germany). Indeed, Kleven et. al.’s estimates

This paper was prepared as a chapter in the Handbook on Labour Markets

in Transition, edited by Stephane Carcillo and Stefano Scarpetta. We
thank Jonathan Martelli for his excellent work as a research assistant.
of the motherhood earnings penalty account for over 80% of the gender
wage gap in all countries considered. While some of this reduction in
earnings is due to discrimination against mothers in the labor market
(Becker, Fernandes, and Weichselbaumer 2019), the majority of the
reduction in earnings for mothers is a consequence of reduced hours of
work throughout motherhood. While mothers increase their hours of work
on average as their children get older, mothers continue to work fewer
hours than do fathers and women without children through their late 50s
(Goldin Kerr and Olivetti 2022).

Thus, effectively reducing differences in labor force participation

between mothers and fathers may have substantial effects on the gender
earnings gap. However, efforts to reduce these differences face three
major challenges. First, many families, particularly highly-educated
families, have high and increasing expectations for the amount of
cognitive stimulation and active investment that children should receive
(Doepke et. al. 2019). Thus, parents must either spend substantial
amounts of time nurturing their children or access high-quality child-
care providers through family, the private market, or the state. Second,
cultural norms in most countries encourage mothers to take more
responsibility for caregiving than do fathers. Thus, mothers adopt a
disproportionate share of parenting responsibilities, and are thus able
to provide fewer hours at work. Finally, reductions in women’s earnings
and workforce participation early in children’s lives increase mother’s
comparative advantage in childcare, both by reducing earnings and by
increasing parenting skill. Thus, shouldering a greater share of
parenting responsibility early in children’s lives increases the
likelihood that a parent will continue to shoulder a greater share of
the responsibility as children get older.

Several policy approaches have been attempted to address these

problems. Policy makers have attempted to encourage women’s re-entry
into the workplace by providing paid leave following the birth of a child

This paper was prepared as a chapter in the Handbook on Labour Markets

in Transition, edited by Stephane Carcillo and Stefano Scarpetta. We
thank Jonathan Martelli for his excellent work as a research assistant.
and by requiring employers to re-hire workers at their previous salary
and title after returning from parental leave. They have attempted to
encourage equality in the division of parenting responsibilities within
the household by providing leave that can be taken only by fathers. They
have attempted to reduce the overall burden, in time and effort, of
parenting by providing free or subsidized child care and extending the
school day. And they have provided financial incentives through changes
to the tax code and to retirement benefits that encourage maternal
employment.

In this paper, we will first discuss the barriers to women’s labor

force participation in greater depth and then review several policies
that attempt to address these barriers. For each policy, we will identify
best practices in the design of policies to promote women’s participation
in the labor market.

2. Barriers to Women’s Labor Force Participation

In this section, we discuss several barriers to women’s labor force

participation: the rise of intensive parenting, cultural norms that
encourage mothers to bear primary responsibility for children, and the
role of intra-household comparative advantage in reinforcing a gendered
division of labor. First, highly-educated households throughout the
world have increased the amount of time, effort, and attention devoted
to children. In the United States, mothers of children under the age of
6 spend an average of 8.8 hours per day caring or children as a primary
or secondary activity, with fathers spending an average of 6.5 hours per
day.1 Furthermore, parents have increased the amount of time they spend
caring for children over the past several decades in all OECD countries
for which data are available (Doepke et. al. 2019).2 These increases are

1 Primary activities: https://www.bls.gov/news.release/atus.t09.htm,

Secondary activities: https://www.bls.gov/news.release/atus.t10.htm
2 Canada, Italy, The Netherlands, Spain, The United Kingdom, and the

United States.

This paper was prepared as a chapter in the Handbook on Labour Markets

in Transition, edited by Stephane Carcillo and Stefano Scarpetta. We
thank Jonathan Martelli for his excellent work as a research assistant.
particularly pronounced among educational activities, developmentally
intensive time, and time focused primarily on children—parenting tasks
that cannot easily be outsourced to childcare professionals (Altinas
2016). This increase has been led by more highly-educated parents. While
American mothers with and without college degrees spent similar amounts
of time with children in 1970 (Bianchi et. al. 2006), mothers with
college degrees spent 50% more time with their children than did mothers
without high school degrees by 2007 (Kalil, Ryan and Corey 2012).
However, time spent with children has increased considerably among less-
educated mothers in the past five years, suggesting that the trend toward
high-effort, intensive parenting is broad-based and likely to persist
(Cha and Park 2021). This trend toward intensive parenting is likely
driven by increasing returns to children’s cognitive ability—Doepke and
Zillibotti (2019) show that this trend has been most pronounced in
countries that have seen the largest increase in the college earnings
premium. As a consequence, most households substantially reduce the
amount of time that they spend at work after having children.

Second, mothers face social and cultural pressure to take primary

responsibility for children. While attitudes toward gender roles have
liberalized in the past several decades, mothers spend considerably more
hours parenting children than do fathers across OECD countries (Craig
and Mullan 2013). In part due to these gender norms, fathers show no
average reduction in work hours following the birth of a child (Kleven
et. al. 2019). Furthermore, mothers face the largest long-run earnings
penalty in countries where larger shares of respondents say that it is
better for children if mothers do not work (Kleven et. al. 2019). While
mothers may take on primary responsibility for childcare in part because
husbands earn more than their partners in more than three-quarters of
marriages (Murray-Close and Heggeness 2018), evidence from several
sources suggests that conformity to gender roles plays a dominant role
in maintaining this inequality. Intra-household earnings differences
produce far less specialization among same-sex couples than among

This paper was prepared as a chapter in the Handbook on Labour Markets

in Transition, edited by Stephane Carcillo and Stefano Scarpetta. We
thank Jonathan Martelli for his excellent work as a research assistant.
heterosexual couples in both the United States (Black, Sanders, and
Taylor 2007) and in Europe (Bauer 2016). Likewise, the distribution of
husband and wife earnings in many countries suggests that heterosexual
couples avoid having wives out-earn husbands, and husbands spend less
time on home production when they earn less than their wives than they
do in gender-equal households (Bertrand, Kamenica and Pan 2015). Notably,
there is no evidence that heterosexual couples avoid having wives out-
earn their husbands in East Germany, where decades of government policy
placed equal pressure on men and women to participate in the labor market
(Sprengholz, Weiber and Holst 2022).

Finally, reductions in women’s earnings and workforce participation

early in children’s lives are maintained and magnified throughout
childhood because they increase mothers’ comparative advantage in child
care. Mothers who spend a larger share of time providing child care than
do fathers become more skilled at child care and related tasks at the
same time that their wages fall relative to their partners’. As a
consequence, it is less costly for mothers to provide parenting in later
years than it is for fathers (Becker 1985, Grunow, Schulz and Blossfeld
2012). Likewise, expectations that women’s earnings are likely to
increase less than men’s over time may lead couples to prioritize
father’s careers even when fathers do not earn more than their spouse
prior to having children (Albanesi and Olivetti 2009), including by
having women restrict their job search to jobs with short commutes
(Albanese, Castro, and Tatsiramos 2022). Thus, differences in the costs
or capabilities of providing childcare at one stage of the life-cycle
are likely to heighten inequality in the allocation of parenting tasks
throughout the life cycle. This dynamic can also extend outside of the
household—the expectation that women will engage in more child care and
less paid work than will men leads firms to discriminate against women
in high-wage occupations.

3. Maternal Leave Policies

This paper was prepared as a chapter in the Handbook on Labour Markets

in Transition, edited by Stephane Carcillo and Stefano Scarpetta. We
thank Jonathan Martelli for his excellent work as a research assistant.
 In all high-income countries, mothers are provided some period of
time after the birth of a child in which employers are required to retain
them while on leave, allowing mothers to return to their job at the same
rank and salary at which they left their job. In all high-income
countries other than the United States, mothers retain part or all of
their salary while on leave from their jobs. 3 These leaves are typically
separated into two categories: maternity leave—intended to provide birth
parents with time away from work shortly before and after work, and
parental leave—intended to provide parents with time to care for a new
infant. EU countries provide mothers with an average of 21 weeks of paid
maternity leave and 43 weeks of paid parental leave.

While these policies are primarily intended to provide financial support

to families of infants, they are also intended, in part, to encourage
women to remain in the workforce in the years surrounding the birth of
a child. By providing job protection to new mothers, these policies can
increase the expected return of investment in human capital—especially
firm-specific human capital—for women who intend to have children (Thomas
2024). As a result, these policies might be expected to increase labor
force participation and wages for women prior to the birth of a first
child and to increase the likelihood that women who leave the workforce
after the birth of a child will return to the workforce at the expiration
of benefits. However, these policies might also discourage female labor
force participation in several ways. By providing a financial benefit
contingent on leaving the labor force, these policies might increase the
number of mothers that take a leave from work after having a child, and
might encourage some mothers to take longer absences from the workplace
than they would in the absence of parental leave policies. These absences
may in turn make long-term reductions in workforce participation more

3 California, Colorado, Connecticut, Delaware, Massachusetts, Maryland,

New Jersey, New York, Oregon, Rhode Island, Washington, and the District of
Columbia also provide paid family leave. https://www.ncsl.org/labor-and-
employment/state-family-and-medical-leave-laws

This paper was prepared as a chapter in the Handbook on Labour Markets

in Transition, edited by Stephane Carcillo and Stefano Scarpetta. We
thank Jonathan Martelli for his excellent work as a research assistant.
likely by depreciating women’s skills in the labor market, by increasing
their skill in parenting tasks relative to partners who remain in the
workforce, and possibly by changing preferences for time spent at work
and with children. In addition, because parental leave policies are
costly for employers, these policies might increase discrimination
against women of child-bearing age, particularly in roles where extended
absence from the workplace is costly (Thomas 2024).

3.1 Critical Policy Elements

This mix of incentives suggests that the effect of parental leave

policies is likely to be contingent on several factors. Effects may
depend on the length of leaves—shorter leaves should have more positive
effects than longer leaves. Likewise, effects may depend on female labor
force participation in the absence of policy—parental leave should have
more positive effects in environments where fewer women work after the
birth of a child. Finally, effects depend on whether the analysis is
carried out in the short-run or the long-run—long-run estimates are more
likely to reflect positive effects on women’s incentive to invest in
human capital and negative effects on firms’ incentives to hire women
of child-bearing age for tasks with high firm-specific human capital.

The extensive empirical literature on the effect of parental leave

on maternal employment largely bears out the prediction that short
parental leaves have positive labor market effects, while long leaves
have negative effects. Olivetti and Petrongolo (2017) use a two-way
fixed-effects design to examine the effect of introducing or extending
parental leave policies in 30 high-income countries, finding that
extensions of leave to lengths of up to one year have positive long-term
effects on women’s employment and earnings, while extensions of leave
to more than one year have negative effects. Estimates using higher-
frequency data in single countries have largely confirmed this finding.
While a one-year paid leave policy increased women’s short-term
employment by 12 percent (Kluve et. al., 2013), further extensions of

This paper was prepared as a chapter in the Handbook on Labour Markets

in Transition, edited by Stephane Carcillo and Stefano Scarpetta. We
thank Jonathan Martelli for his excellent work as a research assistant.
paid leave have reduced women’s earnings and employment (Schönberg and
Ludsteck, 2014). Baker and Milligan (2008) find that Canadian province-
level extensions of parental leave to between 29 and 70 weeks had modest
and statistically imprecise positive effects on women’s employment after
the cessation of leave.

Similarly, empirical estimates provide suggestive evidence that

the effects of parental leave policies on employment are smaller and
more negative when parents have not been able to make occupation or human
capital investment decisions on the basis of the policies—that is, in
the years immediately after implementation, rather than in the long-run.
While the adoption of short-duration paid family leave policies in
California and New Jersey had no immediate impact on the labor force
participation of women with children under the age of 5, both states saw
increases in maternal labor force participation in the decade following
adoption of paid family leave (Jones and Wilcher 2023).

In addition, methodologies that estimate longer-run effects of

parental leave on maternal labor force participation tend to find larger
and more positive effects than do methodologies that estimate effects
on the first cohort of parents eligible for paid leave. Work on parental
leave has largely adopted one of two strategies. The earlier strategy—
adopted by Ruhm (1998), Thévenon and Solaz (2012), Del Rey, Kyriacou and
Silva (2021), and Olivetti and Petrongolo (2017), estimates the effect
of parental leave policies by examining multi-year, multi-country
panels, typically covering several decades. These papers use a two-way
fixed-effects design to compare the change in maternal employment in
countries that have made parental leave more generous to changes in other
countries that have not changed their parental leave policies. Because
these designs include years that are a decade or more after the adoption
of parental leave policies in their estimation designs, they implicitly
estimate an average effect of the policies across early cohorts—who did
not anticipate the policies when making occupation and human capital

This paper was prepared as a chapter in the Handbook on Labour Markets

in Transition, edited by Stephane Carcillo and Stefano Scarpetta. We
thank Jonathan Martelli for his excellent work as a research assistant.
decisions—and later cohorts, who may have done so. Estimates using this
methodology consistently find modest positive effects of short to medium-
length parental leave policies.

In contrast, the later strategy—adopted by Kleven et. al. (2024)

and Dahl et. al. (2016)—uses the timing of births to estimate a
regression discontinuity design comparing households that gave birth
immediately before a parental leave expansion to the timing of births
immediately after a parental leave expansion. Because this approach
examines effects of parental leave policies on the first cohort of
parents exposed to these policies, it does not estimate the consequences
of policy anticipation, either by employers or by workers who expect to
take leave. Both Kleven et. al. (2024) and Dahl et. al. (2016) find no
effect of parental leave policy expansion on female employment or
earnings. This difference in estimates suggests that anticipation of
parental leave may lead to important changes in mother’s workforce
attachment before children are born.

However, an alternative explanation is that the regression

discontinuity approach more credibly accounts for trends in cultural
norms, workplace flexibility, or other factors that may be associated
with the adoption of more generous leave policies. This alternative
explanation could explain why difference-in-difference strategies find
positive effects of short-duration parental leave even in the short-run.
For instance, Rossin-Slater, Ruhm, and Waldfogel (2013) find that
maternal employment increased in California relative to other states in
the four years following California’s adoption of paid family leave.
Bias from unaccounted-for cultural and economic change surrounding the
adoption of leave policy could explain the similarity of Rossin-Slater,
Ruhm, and Waldfogel’s (2013) findings to the findings of long-term,
cross-country comparisons. Future research should consider changes in
the estimated effect of paid family leave policies by cohort explicitly
in order to shed light on this question.

This paper was prepared as a chapter in the Handbook on Labour Markets

in Transition, edited by Stephane Carcillo and Stefano Scarpetta. We
thank Jonathan Martelli for his excellent work as a research assistant.
 Finally, there is some empirical evidence consistent with the
hypothesis that paid family leave policies increase discrimination
against women of child-bearing age—particularly in roles where reduction
in work hours is costly. Huebener et. al. (2021) use administrative
linked employer-employee data in Germany to show that women take shorter
parental leaves when there are fewer workers in their work-groups of the
same occupation (and thus fewer internal substitutes for their labor).
Likewise, firms reduce their likelihood of hiring women of childbearing
age into low-replaceability roles following an expansion of parental
leave. Similarly, Thomas (2024) examines the effect of the United States’
1993 Family Medical Leave Act on women’s work effort before and after
having children and on the hiring decisions of firms. She shows that the
FMLA increased women’s work hours prior to having children—consistent
with job protections increasing women’s expected return on investment.
However, she shows that employers are less likely to hire women of
childbearing age into managerial roles following the adoption of the
FMLA—consistent with employers no longer able to distinguish between
women who are likely to continue working long hours after the birth of
a child and those who will not (Thomas 2024).

3.2 Best Practices and Discussion:

Importantly, in no cases have parental leave policies been shown

to have substantial positive or negative effects on female labor force
participation. Olivetti and Petrongolo (2017) find that an extension of
job-protected leave from 0 to 50 weeks would be expected to increase
female labor force participation by only 1.6 percentage points. Likewise,
while the introduction of unpaid family medical leave in the United
States increased the probability that mothers remain with their pre-
leave employer after giving birth (Baum 2003), there is no evidence that
the introduction of job-protected leave increased overall female
employment or earnings (Han et. al. 2009). Likewise, Kleven et. al.

This paper was prepared as a chapter in the Handbook on Labour Markets

in Transition, edited by Stephane Carcillo and Stefano Scarpetta. We
thank Jonathan Martelli for his excellent work as a research assistant.
(2024) find that repeated expansions of parental leave in Austria from
1950 to 2000 had no effect on long-term female employment or earnings.

4. Paternal Leave Policies

One potential reason that maternal leave policies may have such
disappointing effects on labor force participation is that these policies
reinforce the norm that women ought to have primary responsibility for
children. By encouraging mothers to take career interruptions and to
bond with infant children, these policies increase women’s comparative
advantage in parenting. Because parental leave available to both parents
is disproportionately taken by mothers, gender-neutral parental leave
policies are also likely to reinforce gender norms. To address this, a
majority of OECD countries provide non-transferrable parental leave to
fathers.4 While fathers are allowed to use a portion of parental leave
in most countries, periods of leave reserved for fathers are typically
short. The OECD average is 10 weeks, and Japan (52 weeks) and South Korea
(54 weeks) are the only countries providing more than 31 weeks of
reserved paternal leave.

4.1 Critical Policy Elements

These policies can affect maternal employment through a few

channels. Most immediately, by increasing the availability of fathers
during infancy, these policies could allow women to return to work sooner
than they would absent paternal leave. In addition, by encouraging men
to take short career interruptions in order to bond with and care for
their children, the policies hope to increase men’s attachment to their
children and caregiving skill. Because increased male engagement with
children reduces women’s comparative advantage for parenting tasks, this
might result in a more equal distribution of employment and household
labor after the leave period is over. In addition, by encouraging leaves

4 https://www.oecd.org/els/soc/PF2_1_Parental_leave_systems.pdf

This paper was prepared as a chapter in the Handbook on Labour Markets

in Transition, edited by Stephane Carcillo and Stefano Scarpetta. We
thank Jonathan Martelli for his excellent work as a research assistant.
for men and women, these policies might reduce discrimination against
women of childbearing age by reducing gender disparities in the risk of
work interruptions. If the policies successfully induce men to spend
more time and attention on parenting and less in the workforce, they
would also reduce the signal value of gender for predicting the risk of
reduced long-run engagement in the labor force after the birth of
children. Thus, these policies could reduce statistical discrimination
against women in investments of firm-specific human capital.

Most empirical evidence suggests that even short periods of

paternal leave are broadly effective at increasing paternal parenting
involvement, both during and after the parental leave period. In cases
where leave-taking increases paternal involvement, paternity leave also
appears to meaningfully increase women’s time in the labor market. Using
a difference-in-differences design that compares eligible fathers to
those whose children were born prior to the policy, Farré and González
(2019) show that the introduction of two weeks of paid paternity leave
in Spain led fathers to do almost an hour more childcare per day in the
three years following the birth of their child. Using a regression
discontinuity design at the policy implementation date, Farré and
González (2019) show that the introduction of two weeks of paid paternity
leave in Spain led to a 5% increase in maternal employment in the two
years after childbirth. Likewise, Patnaik (2019) finds that a 5-week
“daddy quota” introduced in Quebec in 2006 increased father’s leave-
taking and father’s long-term involvement in child care. Using time diary
data collected 1 to 3 years after the birth of a child, Patnaik finds
that exposure to paternal leave increased father’s non-market work by
almost 40 minutes per day, with increases in both domestic chores and
childcare. This change had substantial benefits for maternal employment:
Patnaik estimates that paternity leave increased women’s employment
rates and probability of being employed full-time by 5 percentage points,
and increase mother’s average time in paid employment by close to an
hour per day. Kotsadam and Finseraas (2011) examine the effect of the

This paper was prepared as a chapter in the Handbook on Labour Markets

in Transition, edited by Stephane Carcillo and Stefano Scarpetta. We
thank Jonathan Martelli for his excellent work as a research assistant.
1993 introduction of a four-week “daddy quota” in Norway on intra-
household conflict, stated gender attitudes, and division of household
labor 15 years after the policy went into effect. They find that having
the opportunity to take parental leave reduced conflict over the division
of labor and substantially increased the likelihood that couples share
responsibility for household tasks. However, they do not examine effects
on maternal employment.

However, not all evidence points to large or sustained changes in

father’s household involvement. Kleven et. al. (2024) find that a 1996
Austrian reform that required that six months of parental leave be taken
by fathers had no effects on fathers’ earnings and no effect on mothers’
earnings or workforce participation after one year. Similarly Ekberg,
Eriksson and Friebel (2013) find that while the 1995 introduction of a
one-month paternity leave in Sweden increased average paternal leave-
taking by 15 days (a 50% increase), it had no effect on the amount of
time that fathers subsequently spend caring for sick children, and no
effect on men’s labor force participation.

4.2 Discussion and Best Practices:

Most evidence suggests that setting aside parental leave for the
exclusive use of fathers or non-birthing parents can have large and long-
lasting effects on the distribution of labor within the household. Even
modest periods of paternal leave can increase father’s attachment to
their children and comfort caring for their children, in turn freeing
mothers to return to the labor market sooner and for more hours than
they would otherwise. However, these policies are effective only when
fathers take parental leave and take on primary parenting
responsibilities when on leave. This requires clear marketing of parental
leave as an entitlement for fathers, as well as encouragement or
requirement that parental leave be non-concurrent with maternal leave.

5. State-Financed Childcare

This paper was prepared as a chapter in the Handbook on Labour Markets

in Transition, edited by Stephane Carcillo and Stefano Scarpetta. We
thank Jonathan Martelli for his excellent work as a research assistant.
 A second set of policies focuses on reducing the demands of children
on parents’ time. For young children, this is typically accomplished by
providing state-run or state-subsidized childcare for young children.
These policies can promote maternal labor force participation by reducing
the opportunity cost of work. While all OECD countries offer some amount
of state-run or state-subsidized childcare for children under the age
of 5, the details of these policies vary tremendously. The United States
provides state-run child care through Head Start and Early Head Start—
federal programs that provides child care and pre-kindergarten education
for children of very low-income families below the age of 5, and provides
state-level child care subsidies that are typically means-tested. In
contrast, Sweden, Norway, Denmark and Finland provide state support for
childcare for all children under the age of 5, with childcare services
provided by regulated private entities but paid entirely or primarily
by the government. Meanwhile, France 5 and Quebec provide state-run
childcare facilities for children between the ages of 3 and 5.

5.1 Critical Policy Elements

The effectiveness of these programs in promoting maternal labor

force participation depends on several factors. First, the effect of
these policies depends on the alternative care arrangements available
to parents absent state support. State-supported child care will increase
labor force participation among mothers who would provide child care
themselves in the absence of support, but will not affect labor force
participation among mothers who would purchase child care on the private
market or rely on friends and family for child care absent state support.
As a result, the effects of state supported childcare is small for
countries and sub-populations where maternal labor force participation
is already high. Second, effects depend on how state-supported childcare
is apportioned. Even in countries where eligibility for state-supported

5 France also provides subsidies for privately-hired child minders and

nannies.

This paper was prepared as a chapter in the Handbook on Labour Markets

in Transition, edited by Stephane Carcillo and Stefano Scarpetta. We
thank Jonathan Martelli for his excellent work as a research assistant.
childcare is broad-based or universal, actual places in subsidized
childcare may be rationed due to limited availability. If mothers with
strong attachment to the labor market are more motivated to gain access
to limited available spots than are mothers on the margin of employment,
rationing may reduce the effectiveness of child care subsidies in
increasing maternal employment.

Empirical research on child care availability has consistently

shown that state-support for childcare increases maternal labor force
participation in contexts with low prior labor force participation. For
example, Nollenberger and Rodriguez-Planas (2015) show that 1990 and
1997 expansions of publicly subsidized full-time childcare in Spain led
to substantial increases in maternal employment. Prior to the reform,
only 8.5% of Spanish 3-year-olds were enrolled in child care and only
29.3% of mothers of 3-year-olds worked. The reform increased maternal
employment by 9.6%, suggesting that more than 15% of mothers who used
child care became employed as a result. Likewise, Haeck Lefebvre and
Merrigan (2015) examine the effect of a subsidized child-care policy in
Quebec that offered day-care spaces for $5.00 per day for children aged
4 in 1997, and expanded the policy to cover all children under age 5 in
2000. They estimate that the labor force participation rate for mothers
of children aged 1 to 5 increased by 8 percentage points, from a pre-
policy baseline of 57% (well below the Canadian average of 66%).

In contrast, state support for childcare has modest to no effects

on maternal labor force participation in contexts where prior
participation is high. For instance, Fitzpatrick (2010) examines the
effect of Universal pre-kindergarten for four-year-olds in Georgia (in
1993) and Oklahoma (in 2004). In both states, 70% of eligible mothers
were employed prior to the policy change—close to the current OECD
average (OECD 2023). Fitzpatrick finds that universal pre-kindergarten
increased enrollment in preschool by 12% but had no effect on maternal
employment. Likewise, Michalopoulos, Lundquist and Castells (2010) show

This paper was prepared as a chapter in the Handbook on Labour Markets

in Transition, edited by Stephane Carcillo and Stefano Scarpetta. We
thank Jonathan Martelli for his excellent work as a research assistant.
that a random control trial providing child care subsidies to moderate
income families in Illinois had no effect on maternal employment, an
effect that they attribute to the fact that over 90% of the control group
was employed. Similarly, Lundin (2008) examines a 2002 reform in Sweden
which expanded the capacity of child care facilities and capped the price
that municipalities could charge for child care, with the central
government paying the difference between the initial price and the capped
price. At the time of the reform, more than 80% of children aged 3-6 and
60% of children aged 1-2 were already in publicly provided childcare
facilities. While this reform modestly increased use of public preschools
(Wikström 2007), it had no effect on rates of maternal employment (Lundin
2008). Finally, heterogenous effects of universal child care expansions
also show that sub-groups with low maternal employment experience larger
gains in employment than those with higher maternal employment. Cascio
(2009) find that the adoption of universal kindergarten in the United
States in the mid-1960s to late 1970s substantially increased employment
among single mothers, with no effects on married mothers. Cascio
estimates that among single mothers whose children enrolled in pre-
school as a result of this policy, 40% entered the labor market.
Meanwhile, she shows that married mothers exhibited significant
substitution away from private schooling toward public kindergarten, but
had modest employment effects.

Existing evidence also supports the hypothesis that state support

for child care is more likely to raise maternal employment when there
are relatively few barriers to accessing care—reducing self-selection.
For instance, Havnes and Mogstad (2011) find that a large expansion of
heavily subsidized public child care in Norway in 1975 had no effect on
maternal employment, despite the fact that Norway’s maternal employment
rate was only 50% at the time of the expansion. Havnes and Mogstad note
that, while all households in Norway were eligible for this subsidized
child care, the supply of child care was insufficient to meet demand
both before and after the reform. As a consequence, households with

This paper was prepared as a chapter in the Handbook on Labour Markets

in Transition, edited by Stephane Carcillo and Stefano Scarpetta. We
thank Jonathan Martelli for his excellent work as a research assistant.
mothers who intended to work regardless of the policy were likely
overrepresented among those who gained access to the child care. In
contrast, Bauernschuster and Schlotter (2015) find that a 1996 reform
in Germany that made access to highly-subsidized childcare universal for
children aged 3 to 6 substantially increased maternal employment. Prior
to this reform, childcare centers were highly over-subscribed in West
Germany, but not in East Germany. As a consequence, West German mothers
who wanted access to state-supported child care needed to request spaces
early and in multiple centers. After the reform, the government committed
to fully meeting demand for child care across the country—likely
increasing usage primarily among mothers who were less motivated to
access care. The authors estimate that the reform increased maternal
employment by 6.5 percentage points, suggesting that 36% of mothers whose
children were enrolled in kindergarten as a consequence of the policy
became employed as a result.

5.2 Discussion and Best Practices

As discussed above, state subsidy for child care is most effective

when subsidies are targeted at mothers who are likely to work if provided
with low-cost child care, but who will not work in the absence of such
child care. A key challenge for these programs is that the mothers who
are most motivated to take advantage of these policies are those who are
likely to work even in the absence of subsidized child care. As a
consequence, these policies are most likely to increase maternal
employment when directed at communities where maternal employment is
low. Likewise, these polices are likely to be most effective when policy
makers avoid overcrowding, waiting lists, and other barriers to the
utilization of subsidized child care, because these barriers are likely
disproportionately discourage the households who are most likely to
respond to the policy.

6. Extended School Hours

This paper was prepared as a chapter in the Handbook on Labour Markets

in Transition, edited by Stephane Carcillo and Stefano Scarpetta. We
thank Jonathan Martelli for his excellent work as a research assistant.
 State support can also substitute for parental time among older
children through policies to extend the school day to match the length
of the work day. In most countries, children between the ages of 6 and
18 can attend free, universal, schooling from the early morning until
the early afternoon. However, the school day typically ends several hours
before parents finish their work day. As a consequence, parents must
either leave work early to care for children after school, enroll
children in after school programs, or pay for after school child care.
As a result, providing free after school activities or extending
compulsory school hours to match the work day can plausibly increase
employment rates for mothers of school-aged children and increase hours
of work for employed mothers.

6.1 Critical Policy Elements

The expected costs and benefits of extended school days are quite
similar to those of state-financed childcare. As with state-financed
childcare, targeting extended school hours is a key challenge—policies
are most cost-effective if they target parents who are unlikely to work
or unlikely to work full-time without policy intervention, but parents
who are likely to work regardless of the policy are most likely to take
it up. As a consequence, extended school days are most likely to affect
maternal employment in contexts where maternal employment is low and
where access to extended school days is easily available. However,
extended school days differ from state-financed childcare because the
cost of caring for older children is considerably less than that of
caring for younger children. For the state, providing adequate child
care for children younger than school age requires a high ratio of care-
givers to children, resulting in high overall costs of child care
programs and high marginal costs. In contrast, after-school programs for
older children can be provided at high quality with a much lower ratio
of instructors to students, reducing overall costs and especially
reducing marginal costs in contexts of relatively low take-up. At the

This paper was prepared as a chapter in the Handbook on Labour Markets

in Transition, edited by Stephane Carcillo and Stefano Scarpetta. We
thank Jonathan Martelli for his excellent work as a research assistant.
same time, because the cost of caring for older children is also lower
for parents, school day extensions are likely to have a smaller effect
on the costs and benefits of employment than do state-financed childcare
programs. Older children can be more easily left in the care of a
relative, placed in private after-school programs, or left unsupervised—
more than 20% of US elementary school children 6 and 25% of UK elementary
school children (Pearce et. al. 2014) spend are unsupervised after
school. In addition, while mothers of older children have a higher
employment rate than do mothers of younger children, mothers of older
children who are not employed are more likely to have had an extended
absence from the workplace (Turon 2023). As a result, the elasticity of
maternal labor supply is likely lower for parents of older children.

While the empirical literature on the effect of extended school

days on maternal labor supply is sparser than the literature on child
care for young children, the available evidence suggests that programs
that extend the school day or provide after-school programs are most
likely to affect maternal labor force participation when coverage is
universal and cost of participation are low—consistent with the
hypothesis that mothers with the largest treatment effects are least
likely to gain access to these programs. For instance, Contreras and
Sepulveda (2017) show that a reform in Chile that lengthened the
mandatory school day by three hours for children between the ages of 8
and 13. They find that this reform increased labor force participation
among single mothers of children in the affected age range by 4
percentage points from a baseline of 68%, but had no effect on the labor
supply of married mothers or of mothers with younger children. In
contrast, Dehos and Paul (2023) show that an massive expansion in the
availability of after-school programs in West Germany—from covering 1%
of primary-school children in 2002 to covering 22% by 2012—had no effect
on maternal employment or on hours worked. Because nearly all after-

6 https://www.afterschoolalliance.org/documents/AA3PM-
2014/AA3PM_Key_Findings.pdf

This paper was prepared as a chapter in the Handbook on Labour Markets

in Transition, edited by Stephane Carcillo and Stefano Scarpetta. We
thank Jonathan Martelli for his excellent work as a research assistant.
school programs had a waiting list, this reform only affected the fifth
of households who signed up earliest for after-school programs. If these
households represent the most motivated fifth of German households, they
may have been households with mothers who already intended to work full-
time.

In contrast, policies that extend the school day to five days per
week show more consistently positive effects. For instance, Duchini and
Van Effenterre (2020) examine the effects of a 2013 French reform that
reallocated some of children’s class-time to Wednesday mornings, rather
than concentrating class time in four days per week. The reform replaced
instructional hours on other weekdays with three hours of free, optional
extracurricular activities. They find that this reform increased the
likelihood that mothers work a five-day workweek by three percentage
points, with most of this increase coming from mothers who shifted from
part-time to full-time work contracts. Further, it increased mothers’
average monthly wages by 3%. Because this reform had no effect on the
work schedules of fathers, this reform reduced the gender wage gap among
parents of elementary-school children by 6 percentage points. Similarly,
Ward (2019) examines the effect of adopting a 4-day school week in rural
school districts in the United States. Ward finds that this shift reduces
maternal employment by 7.6 percentage points, with reductions coming
entirely from married mothers.

6.2 Discussion and Best Practices

While empirical evidence on extended school days is limited, the

best available evidence suggests that extended school days can increase
maternal employment. These policies are likely to have the largest impact
when they are universal, to avoid negative selection. In addition,
policies that ensure that children have care for the majority of the
work day for five days per week have larger impacts than do policies
that extend the school day.

This paper was prepared as a chapter in the Handbook on Labour Markets

in Transition, edited by Stephane Carcillo and Stefano Scarpetta. We
thank Jonathan Martelli for his excellent work as a research assistant.
7. Tax and Retirement Policy

A final set of policies can influence women’s labor force

participation by reducing effective marginal tax rates on second earners.
Because women earn less than their spouses in more than three-quarters
of marriages (Murray-Close and Heggeness 2018), progressive taxes based
on household incomes tend to impose larger marginal taxes on married
women than they would face as unmarried individuals.7 Likewise,
retirement benefits that take into account spouse earnings, such as the
Social Security Spouse Benefit in the United States (Borella et. al.
2023), reduce the marginal return to work for mostly-female secondary
earners.

7.1 Critical Policy Elements

The degree to which married women’s real hourly earnings are

influenced by these policy choices depends on the characteristics of the
tax system as well as the characteristics of the household. In most
progressive tax schemes, the effect of marriage on a woman’s marginal
tax rate will be higher when the woman’s spouse’s income is larger and
the woman’s own income is lower. As a consequence, tax policies might
be expected to play a large role in the work decisions of spouses of
high-income men who have a weak attachment to the labor market. In
addition, due to means-tested benefits like the Earned Income Tax Credit
in the United States, the Prime D'Activité in France or the Working Tax
credit in the UK, effective marginal tax rates are often higher for very
low-income households than for households elsewhere in the income

7 The use of household income for determining taxes, benefits, and

retirement varies considerably among OECD countries. While a majority of
countries require individuals to file their own tax returns regardless of their
marital status, Belgium, Switzerland, France, Greece, Luxemburg and Malta
require married households to file a joint return. Meanwhile the United States,
Germany, Spain, Ireland, and Portugal allow couples to file taxes individually
or jointly, with tax brackets for married individuals filing individually
differing from those for single individuals (Deloitte 2017).

This paper was prepared as a chapter in the Handbook on Labour Markets

in Transition, edited by Stephane Carcillo and Stefano Scarpetta. We
thank Jonathan Martelli for his excellent work as a research assistant.
distribution. As a result, tax and benefit systems may also have a
larger-than-average effect on the labor supply decisions of very low-
income women.

Estimates of the effects of tax and benefit systems on women’s

employment have to contend with several empirical challenges, common to
the literature on responses to taxation. First, the short-run and long-
run responses to taxation may differ considerably. Households that
anticipate facing high taxes in the future may report more taxable income
ahead of tax increases, exaggerating estimates of short-run responses
to taxation. At the same time, short-run responses to tax policy may be
much smaller than long-run changes, both because tax rates will affect
human capital decisions in the long-run (Saez, Slemrod and Giertz 2012)
and because households may not understand new tax policies well enough
to respond to them (Chetty, Friedman and Saez 2013). In addition, many
households may not understand or react to distinctions between marginal
and average tax rates even from long-term, relatively simple tax policies
(Feldman, Katuscak and Kwano 2016). As a result of these factors,
reduced-form estimates of policy responses that measure the short-run
effects of policy changes may differ considerably from the long-run
effects of the same tax policies over the life-cycle. Due to this
limitation, much of the work on responses to taxation has relied on the
use of structural models calibrated to explain household behavior well
enough to estimate behavior under various counter-factual policies.

These structural estimates of the effects of joint taxation and

spousal retirement benefits on women’s labor supply consistently find
that household taxation and retirement benefits based on spousal earnings
have large, negative effects on female employment. For example, Borella
et. al. (2023) construct a dynamic life-cycle model of household earnings
that incorporates all marriage related taxes and benefits in the United
States into a unified framework. By simulating counterfactual policy
regimes in their model, they estimate that eliminating spousal social

This paper was prepared as a chapter in the Handbook on Labour Markets

in Transition, edited by Stephane Carcillo and Stefano Scarpetta. We
thank Jonathan Martelli for his excellent work as a research assistant.
security benefits would increase the labor market participation rate of
married women by 10 percentage points from ages 25-60. Likewise, they
estimate that eliminating joint income taxation would increase women’s
labor force participation rate by more than 20 percentage points through
age 35 and by 10 percentage points from age 35 to 60. Meanwhile,
eliminating both marriage-related tax and benefit provisions would raise
labor market participation of married women by between 15-28 percentage
points through age 62. Similarly, Guner, Kaygusuz and Ventura (2012)
find that eliminating joint taxation would increase the labor supply of
married women by 10%, and of married women with children by 18%. Kabátek,
Van Soest and Stancanelli (2014) arrive at more modest estimates of
switching to individual taxation in France, estimating that this would
increase women’s labor market hours by 3.7% while reducing their hours
of housework by 2%, with smaller changes in the opposite direction for
men.

These estimates are largely consistent with the limited reduced-

form estimates of the effects of shifts between individual and joint
taxation systems. For instance, Selin (2014) shows that a 1971 Swedish
reform that eliminated joint taxation increased employment among women
of high-earning husbands—who had faced the highest marginal tax rates
under the joint taxation regime. Likewise, Crossley and Jeon (2007) show
that a 1998 Canadian reform that replaced a spousal tax exemption with
a non-refundable tax credit increased labor force participation among
wives of high-income husbands by 10 percentage points. Likewise, shifts
from individual to joint taxation schemes have reduced labor force
participation. Lalumia (2008) shows that the introduction of joint
taxation in the United States in 1948 reduced married women’s labor force
participation by 2 percentage points, with the decline coming entirely
from wives of high-income husbands. Likewise, Kalíšková (2014) shows
that the introduction of joint taxation in the Czech Republic reduced
employment of married women with children by 3 percentage points, with
spouses of college-educated husbands reducing employment by 6 percentage

This paper was prepared as a chapter in the Handbook on Labour Markets

in Transition, edited by Stephane Carcillo and Stefano Scarpetta. We
thank Jonathan Martelli for his excellent work as a research assistant.
points. Reduced-form evidence also suggests that low-income mothers are
highly responsive to work incentives in the tax code. For instance,
Chetty, Friedman and Saez (2013) exploit differences in knowledge about
the work incentives of the Earned Income Tax Credit in the United States
to show that mothers substantially increase earnings in order to receive
the full value of the tax credit.

7.2 Discussion and Best Practices

Most available evidence suggests that high-income and low-income

women are fairly responsive to tax and benefit incentives. As a result,
policy-makers may be able to encourage increases in women’s labor supply
by requiring married individuals to file taxes individually,
conditioning retirement benefits only on individual income, and reducing
marriage penalties in the design of means-tested transfer programs.
However, there are a few reasons to conclude that the empirical
literature on these policies may overestimate their effects. While
structural estimates can address questions that are unavailable to
reduced-form researchers, estimated policy effects emerging from these
models will not incorporate factors like imperfect information or social
resistance to women earning more money than their husbands unless those
factors are explicitly included in the models. As a result, they may
have a tendency to over-state the effects of changes in tax policy.
Meanwhile, reduced-form estimates of women’s responsiveness to tax
policy changes examine policy changes that occurred several decades ago,
in a context of rising female labor supply. However, women’s elasticity
of labor supply with respect to their own and their spouses’ incomes
have been falling since the 1990s (Blau and Kahn, 2007) and women’s labor
supply has stopped growing in most developed countries (OECD 2023). As
a consequence, future tax and benefit policy changes may have effects
smaller than those suggested in prior literature.

8. Concluding Remarks

This paper was prepared as a chapter in the Handbook on Labour Markets

in Transition, edited by Stephane Carcillo and Stefano Scarpetta. We
thank Jonathan Martelli for his excellent work as a research assistant.
 As we have discussed in this paper, well-designed policy can
promote women’s workforce participation by reducing the difficulty of
re-entering the labor market after having children, by reducing the time
and financial burden of parenting through state support, and by
encouraging fathers to take on a larger share of parenting
responsibilities. However, the effectiveness of public policy in
promoting labor force participation depends strongly on the design of
the policy and the context in which the policy is implemented. While
paid family leave can promote re-entry of mothers into the labor market
after completing leave, leaves of more than one year can depreciate
mother’s human capital and increase discrimination against women of
child-bearing age. Parental leave reserved for fathers can promote
greater gender equality in the division of parenting and paid work, but
does not provide a benefit for single mothers. Provision of child
support, extended school hours, and tax incentives for female labor force
participation are all more likely to affect mothers who are marginally
attached to the labor force than those that are more strongly committed
to the labor force. As a result, all of these policy approaches are
likely most effective when provided in a simple, universal way that
minimizes self-selection, and least effective in countries with already-
high levels of female labor force participation.

However, much of the gap between mother’s and father’s labor force
participation is unlikely to be resolved through any of the policies
discussed in this paper. Women have substantially lower labor-force
participation than men in every OECD country (OECD 2023), demonstrating
that no as-of-yet existing combination of labor market policies has
eliminated all barriers to women’s employment. As a result, policy makers
may want to consider how to shift culture and norms around gender, in
addition to considering how to create better incentives for women to
enter or re-enter the workforce.

This paper was prepared as a chapter in the Handbook on Labour Markets

in Transition, edited by Stephane Carcillo and Stefano Scarpetta. We
thank Jonathan Martelli for his excellent work as a research assistant.
 We can find insight on the question of how to shift culture and
norms from a growing body of research considering how gender norms are
formed and how they change. Several studies have examined the role of
early childhood experiences on the formation of gender roles. For
instance, Fernandes, Fogli, and Olivetti (2004) shows that the sons of
women who were pulled into the workforce during World War II were more
likely to have wives who worked, suggesting that increases in women’s
labor market participation can have inter-generational effects on
cultural norms and expectations. Likewise, Olivetti, Patacchini and
Zenou (2018) show that young women in the United States are more likely
to work after having children and less likely to feel that work
interferes with family responsibilities if a larger share of their high
school peers’ mothers worked.

Gender norms are also affected by environments directly shaped by

policy—particularly school and classroom environments. Girls score
better on STEM subjects and request more demanding high schools when in
classrooms with less gender-biased teachers (Carlana 2019). Likewise,
Schneeweis and Zweimüller (2012) find that girls who attend all-girls
schools are more likely to major in STEM. School environments can also
reinforce gender stereotypes—Cools, Fernández and Patacchini (2022) find
that girls in a school cohort with high-achieving boys are less likely
to attend college and have lower labor force participation. Similarly,
Brenøe and Zölitz (2020) find that, for students attending mixed-gender
schools, girls are less likely to major in STEM and boys are more likely
to major in STEM when placed in cohorts with more girls.

Some evidence suggests that active and intentional intervention in

the formation of gender norms in the classroom can be effective. Dhar,
Jain, and Jayachandran (2022) show that an Indian program encouraging
adolescent students in extended and repeated discussions of gender
equality led boys and girls to adopt and maintain gender-inclusive
attitudes. Similarly, Ashraf et. al. (2020) show that providing Zambian

This paper was prepared as a chapter in the Handbook on Labour Markets

in Transition, edited by Stephane Carcillo and Stefano Scarpetta. We
thank Jonathan Martelli for his excellent work as a research assistant.
girls with negotiation training improved educational outcomes over the
course of three years. Classroom interventions can shape attitudes and
behavior in developed countries as well—female undergraduate students
in the United States became more likely to major in economics when
introduced to successful female economics majors in their introductory
courses (Porter and Serra 2020).

In addition, attitudes about women’s employment can be affected by

the observed diversity of major professions. Battaglini, Harris and
Patacchini (2023) show that random assignment to cases with female judges
increases the likelihood that male judges hire women for entry-level
positions. Similarly, Riise, Willage and Willen (2022) show that Swedish
girls who are assigned a female primary care physician are more likely
to choose male-dominated education programs in high school—particularly
programs in STEMM. This work suggests that small increases in women’s
labor force participation can spur larger changes by increasing the
visibility of women’s careers. Likewise, it suggests that intentional
efforts to diversify important, visible positions in society can
meaningfully influence gender norms.

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