Women’s workforce particpation

The SST report:

A generation of young, educated New Zealand women is being lost to the workforce because they can’t afford childcare.

Many tertiary educated and trained mothers are deciding to retrain as teachers or nurses, professions that offer more flexible work options. …

New Zealand has one of the lowest workforce participation rates for women in the 25-34 age group compared to the rest of the OECD.

Labour’s early childhood education spokeswoman Sue Moroney said the government’s reluctance to look at the issue was causing skills and talent to be lost to the workforce.

Nordic countries such as Norway and Sweden had the highest participation rates, and also spent the most on childcare, and had generous paid parental leave provisions.

I went looking for research on this, and found this paper. It’s 40 pages long and has every stat you can think of on workforce participation by women, written by a (then) Treasury boffin.  One thing he noted was:

The previous section has shown that differences between countries can be attributed in part to differences in the participation of, and prevalence of, different types of families. At least some of the difference between countries, however, might simply be due to the definition of “participation”. We illustrate this by comparing participation rates in New Zealand to those in the highest-participating countries in the OECD, the Nordic countries.

In official statistics, women on paid parental leave should be counted as employed, even though they are not working.21 Nordic countries have amongst the most generous paid parental leave provisions in the OECD

That is worth remembering. In these statistics, you are counted as still being in the workforce if on paid parental leave, so there is no surprise there is a correlation. They modeled for this impact:

The maximum effect of these differences in paid parental leave can be modelled by assuming that women take the maximum leave available for all their children and adjusting the reported participation figures to reflect this. Figure 24 shows that after this adjustment there is a marked ‘dipping’ in participation rates in the Nordic countries. When adjusted, the profile of women’s employment rates in these countries loses its n-shape, and becomes much more like the profile in New Zealand. The difference in participation rates of women aged 25 to 39 years is also markedly reduced after adjustment.

So extending paid parental leave makes the stats looks better, because women on paid parental leave are counted as being in the workforce. But whether it actually makes a significant difference to the number of women actually being in paid work, is far less clear. Some other interesting stats:

Among New Zealand women, the presence and age of children, being a sole or partnered mother, and level of qualifications have a strong effect, and each factor has an effect which is independent of the other two. Mothers with different combinations of these characteristics have widely varying participation rates. At one extreme, for example, sole parents with a pre-school child and no school qualification have a participation rate of only 32%. At the other extreme, partnered mothers with a child aged 10-17 and with a post-school qualification have a participation rate of 91%.

And for the 25 – 34 year old age group:

Compared to other OECD countries, New Zealand has a relatively high overall female participation rate. Yet, participation rates for women between the ages of 25 and 39 are conspicuously low by international standards. Few other countries show a dip in participation rates in the peak childbearing ages. This point of difference seems to be driven by a combination, in New Zealand, of relatively low participation rates among mothers with young children and sole mothers, together with high fertility rates and high proportions of sole parent families.

So arguably the welfare reforms which will discourage sole parent families to have further children, will increase the participation rates, as well as the increased work-testing requirements.

The research also notes (and this was done in 2005 when Labour was Government):

Differences in participation between countries may also reflect differences in government policies (such as tax and benefit policies) or social norms (such as the attitudes towards, and expectations of, women working compared to looking after their children). OECD countries can be grouped according to their pattern of women’s participation across ages, and these groupings to a considerable extent reflect similarities in the countries’ values, social conventions, institutions and recent histories. Not surprisingly, New Zealand’s profile is most similar to Australia and the United Kingdom: countries with whom we share a common heritage. The participation profile of New Zealand men, relative to the OECD, is also similar in many ways to that of New Zealand women, with relatively high participation rates for younger and older people, but relatively low rates for people aged around 25-39. These similarities support the case for the existence of particular “country effects”, which affect both women and men.

I think cultural issues are always significant.

The paper concludes:

How does all this inform the public policy question of whether, and how, to encourage the greater participation of women in New Zealand? Some initial thoughts are be hazarded here. Firstly, since different groups of women, and mothers, have widely differing participation rates, any policies which aim to increase the participation of women would need to be carefully focused. One type of policy is unlikely to work for all women. Also, since some groups of women already have high participation rates, policies which aim to increase this participation even further may incur high deadweight costs.

A very interesting paper. The issues are far more complex than paid parental leave.