Do Family Policies Reduce Gender Inequality? Evidence from 60 Years of Policy Experimentation
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Austria’s extensive family policy reforms over 60 years have not narrowed the gender pay gap. The raw gender gap in earnings remains roughly 40% despite a 30 percentage point decrease from 1953 to 2017.
Henrik Kleven, Camille Landais, Johanna Posch, Andreas Steinhauer and Josef Zweimüller, "Do Family Policies Reduce Gender Inequality? Evidence from 60 Years of Policy Experimentation," National Bureau Of Economic Research, November 2020, https://www.nber.org/papers/w28082
Their conclusion, "....We find that parental leave policies have had negative short-term effects on female labor market outcomes, but no long-term effects.... Our main conclusion is simple and striking: The enormous expansions of parental leave and child care subsidies have had virtually no impact on gender convergence..... The short-term effects are relatively small and largely inconsequential for the evolution of aggregate gender inequality. More surprisingly, we also find that publicly provided and heavily subsidized child care has had no effect on the secular decline in gender inequality. This stands in contrast to the strong cross-country correlation between child care subsidization and gender gaps, while within-country quasi-experimental studies of specific reforms have led to mixed results. Broadly speaking, our evidence is consistent with the ideas exposed in Goldin (2014), arguing that gender convergence relies less on government intervention than on equilibrium features of the labor market. Our work is also consistent with the notion that gender convergence reflects the evolution of gendered preferences and norms.....This underlines the need for furthering our understanding of the formation of preferences and social norms regarding the family-career choices of men and women, and to account for their potential interaction with public policies. Endogenous preferences may create multiple equilibria and tipping points, whereby small changes in policies can have large effects on gender inequality. Conversely, as seems to be the case in Austria, gendered preferences can be sufficiently strong that gender gaps do not respond to even very large expansions of policies..."
Those programs have had the following impact on the wage gap, "... we rely on exceptional administrative data covering the labor market and birth histories of Austrian workers from 1953 to 2017. During this era, the Austrian gender gap in earnings fell by about 30 percentage points, while public policies supporting families with children were introduced and greatly expanded...."
Though their Figure 9 was strongly illustrative of the null effect they found (here in terms of childcare expansion)“…We start in Figure 9 by presenting the results for nursery care expansions. In panel (a), we focus on women who are one year before birth (t = −1), and report their estimated earnings in control municipalities vs treated municipalities, from five years before, to five years after the expansion shock. The graph first shows no evidence of a differential trend in earnings before expansion. This helps alleviate concerns that the supply shock was an endogenous response to the evolution of female labor market outcomes in treated municipalities. Secondly, the graph reveals that the expansion had no effect on the outcomes of women prior to giving birth. In other words, the increased access to child care did not lead to anticipatory effects among women about to have children…”
Bottom line more generous family policy extension over 50 years has had no impact on gender convergence “…Our main conclusion is simple and striking: The enormous expansions of parental leave and child care subsidies have had virtually no impact on gender convergence…”That implies the gap is a revealed preference, “…Broadly speaking, our evidence is consistent with the ideas exposed in Goldin (2014), arguing thatgender convergence relies less on government intervention than on equilibrium features of the labor market. Our work is also consistent with the notion that gender convergence reflects the evolution of gendered preferences and norms…”
The NBER study mentioned in WSJ uses several natural experiment resulting from family policy reforms (childcare and parental leave expansions) in Austria. For context this is what Austria looks like today, "...The raw gender gap in earnings is roughly 40% and the female labor force participation rate is about 55% (in 2018)..."
Ed Comment:“….Blog post (….but no posting until my kid gets into college. …thank you Steve for supporting that crime.) The Austrian parental leave system stands out as one of the most generous in the developed world. Parents are entitled to up to about 35 months of paid leave The median replacement rate is about 40% of net earnings. The receipt is not subject to any work eligibility requirement prior to child birth. Our main conclusion is simple and striking: The enormous expansions of parental leave and child care subsidies have had virtually no impact on gender convergence. Our work is consistent with the notion that gender convergence reflects the evolution of gendered preferences and norms….”