Wednesday, April 25, 2007

Employment Gaps, Fertility Rates and Tax Rates

From The Economist: A study by Kevin Daly of Goldman Sachs has measured the gender employment-rate gap (the male employment rate minus the female one) in several countries. Some findings:

1. In Spain and Italy the employment gap is over 20% (low rate of labor force participation for women), in contrast with Sweden's 4% (almost equal participation rate for men and women), see top graph above.

2. Increasing the rate of female labor force participation could increase economic growth by as much as 13% in the Euro-zone.

3. Higher female emploment does not reduce fertility rates: in countries with a smaller gap (like Sweden, Denmark, Iceland and even the U.S.), women tend to have more babies (see bottom chart above) than in higher gap countries (like Italy and Spain). (MP: This surprises me, I would expect countries like Spain, Greece and Italy with low labor force participation rates for women to have higher fertilty rates, not lower).

4. The tax burden on second earners explains some of the employment gap. In both Spain and Italy second earners pay considerably more tax then their partners do, whereas in Sweden the rate is the same.


At 4/25/2007 3:12 PM, Anonymous Anonymous said...

Is it possible that the number of children depends on the income level. A double income family might have more spending power to take care of more kids - in these specific economies and cultures.

At 4/25/2007 9:53 PM, Anonymous Sudha Shenoy said...

1. Sweden: The individual is the tax unit -- there are no dependents' allowances. Pensions are also paid individually. So a female who doesn't work gets no pension -- there are no married couples' pensions. And her hubby pays tax as a single unmarried person. Also maternity leave & income-support depend on working prior to having the child. But these are lavish.Child care is heavily subsidised.

Overall, females find it almost necessary to work. The idea is to expand the number of taxpayers, to pay high Swedish taxes. But maternity subsidies reduce the income lost if time is taken for bearing a child. So birth rates are not reduced.

2. The birth rate in Italy has been falling since 1970; it fell below replacement in 1975, & the Italian population has been declining slightly since 1995. (This is well-known.)

In Spain: the birth rate declined steeply in the 1980s & is well below replacement. (Ditto.)

Japan: married women can only get low-paid part-time jobs. But the Japanese birth rate is about the lowest amongst DCs. It started falling in the late 1960s, & is far below replacement. (Ditto.)

There's a lot more going on here than just income or taxes.

At 1/09/2009 10:25 PM, Blogger Erik said...

In countries where it is easier to both work and have children, like Sweden, more women work and have children. In coutries where you have to choose between working or having children, both the number of women working and having children of course drop.

In USA, the white population have a lot less than 2 children per woman, and the hispanic population is having many more children.


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