Paternity Leave in the OECD: Expectations vs. Reality

 

Domestic Equality: A Question of Economics?

For many, gender equality may seem like an inherently ideological issue for which a debate based on economic merit is entirely inappropriate. However, the effect of equality measures on the composition of the labour force clearly has an economic dimension worth considering.

Figure 1: Avg. Births per Woman in the OECD. World Bank,  Gender Statistics Quarterly.

Encouraging female labour typically reduces economic dependency levels, increasing the population’s productive capacity. In the OECD, years of policy aimed at entering women into formal employment has seen the female proportion of the labour force creeping towards the 45% mark, up from 32% in 1960. Yet, this comes at a cost to domestic efforts, which isn’t captured by productivity measures such as GDP. A particularly troubling trend is the decrease in fertility rates experienced by many western economies. If the demographic composition of the OECD is to support current pension systems, several countries urgently need both fertility rates and labour participation rates to rise. Thus, policy aimed at increasing the level of working mothers is clearly of imperative economic importance.

Figure 2: Expected Years of Schooling in the OECD by Gender. World Bank, Gender Statistics Quarterly.

OECD countries have largely moved to a neutral education system, where housekeeping skills traditionally taught to girls have fallen out of the curriculum, and women are invested in as human capital at the same rate (if not higher) than men. Yet, women are still spending a considerable amount of their productive hours taking care of their families [1]. Complementary to this, it is also apparent that women are more likely to take on part-time employment than men.

Figure 3: Part Time Employment in the OECD by Gender (2014). World Bank, Gender Statistics Quarterly.

From the perspective of the parents, it is easy to see why it would be sensible to prioritize the career of the father. After all, as has been established by popular press, men earn higher wages than their female counterparts. There are also cultural, and (many would argue) biological, contexts to consider. Where families are not able to source external provision of child-care and housekeeping, some would view it as unnatural for a father to take on these responsibilities. These effects combine to uphold a status quo where fathers still work more than mothers.

For the economy this allocation of efforts simply doesn’t make sense. If women are receiving the same education and training as men, it stands to reason that the present situation reflects an inefficient dispersion of responsibility between parents.

Figure 4: Average Hours/Week Spent on Care (2000-2010). OECD Family Database. [1]

The extent to which gender equality of domestic efforts can, or should, be pursued is the domain of a multitude of sciences, making this a complex policy issue. Yet, the economic argument is simple: In economies dependent on a high proportion of working parents it is important to address the cost of inefficient allocations of parental responsibility.

Paternity Leave: A Promising Policy

As the above discussion highlights, policy relating to child-care is a crucial consideration in the pursuit of more working mothers.

Except for the USA, all OECD countries offer a minimum of 14 weeks paid maternal leave, in compliance with the International Labour Organization’s (ILO) Maternity Protection Convention. However, several OECD countries also have extensive periods of leave that are only available to the father. This policy partly aims at boosting fertility rates amongst a working female population by making the career cost of having a child smaller. Importantly, parental leave for both mothers and fathers is also found to greatly benefit children’s development and long-run outcomes.

For those countries that only specify parental leave for mothers, it is feared that governments are promoting an unequal dispersion of domestic responsibility that carries on beyond the period of leave. A further concern is that it incentivizes firms to invest more in men rather than women of child-bearing age, as there is less risk of these workers taking time off to have a family. A final worry is that the period of leave itself puts mothers at a disadvantage when returning to work, setting back career progression relative to their male peers. Introducing paternity leave is seen as a way of dealing with these issues, breaking down the cultural and monetary barriers currently preventing families from dispersing their efforts efficiently.

Figure 5: Weeks of Parental Leave Exclusively Available to Fathers, and Average Payment Rate Over Period of Leave. OECD Family Database.

The Disappointing Evidence

To sum the above discussion, implementation of paternity leave is popularly promoted as a one-fit-all policy to improve both domestic and work place equality. Disappointingly, the policy doesn’t appear to have had much success in bringing about these improvements.

In countries with generous time allocated to paternal leave, but where the level of compensation for such leave is low, there is a persevering problem of families simply not opting for the paternity leave on offer. The starkest examples of this issue are Korea and Japan, both offering in excess of 50 weeks paternity leave, with both policies suffering from a very low uptake. Japan in particular is argued to suffer from high cultural barriers preventing fathers from taking leave, despite decades of policy aimed at enforcing workplace equality, with reports revealing that as little as 2% of fathers take any of the leave offered.

However, there are also problems beyond the uptake of leave itself. A study into causal effects of Norwegian paternal leave from Statistics Norway found that it actually reduced maternal wages and working hours. This highly surprising finding suggests that the policy negatively impacted maternal labour market outcomes, quite contrary to its intended effect. This is particularly disappointing in light of Norway’s high uptake rate (reported at 76% in 2012), which indicates that the policy is well-placed to have a large impact on the labour market.

Still, the OECD is persistent in its promotion of paternity leave as an attractive policy. In a policy brief from last year the organization expresses concern about issues relating to uptake, but convey an overwhelmingly positive image of the effects of paternity leave itself. However, it should be noted that the publication places a strong focus on the developmental benefit paternal leave has on children, perhaps due to the lack of evidence of the policy meeting its other intended aims.

It appears that paternity leave is great for many reasons, but perhaps not all the reasons we’d hoped for.

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[1] The figure depicts hours spent on care per week by gender. This includes child-care as well as other care-giving activities.