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Boosting the efficiency of household production
could have large economic effects
The time household members in industrialized
countries spend on housework and shopping is substantial, amounting to about
half as much as is spent on paid employment. Women bear the brunt of this
burden, driven in part by the gender wage differential. Efforts to reduce
the gender wage gap and alter gendered norms of behavior should reduce the
gender bias in household production time and reduce inefficiency in home
production. Policymakers should also note the impact of tax policy on
housework time and its market substitutes, and consider ways to reduce the
distortions caused by sales and income taxes.
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Better educated parents invest more time and
money in their children, who are more successful in the labor market
Governments invest a lot of money in education,
so it is important to understand the benefits of this spending. One
essential aspect is that education can potentially make people better
parents and thus improve the educational and employment outcomes of their
children. Interventions that encourage the educational attainment of
children from poorer families will reduce inequality in current and future
generations. In addition to purely formal education, much less expensive
interventions to improve parenting skills, such as parental involvement
programs in schools, may also improve child development.
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Public education tends to crowd out parents’
time and money, but careful policy design may mitigate this
Many countries around the world are making
substantial and increasing public investments in children by providing
resources for schooling from early years through to adolescence. Recent
research has looked at how parents respond to children’s schooling
opportunities, highlighting that public inputs can alternatively encourage
or crowd out parental inputs. Most evidence finds that parents reduce their
own efforts as schooling improves, dampening the efficiency of government
expenditure. Policymakers may thus want to focus government provision on
schooling inputs that are less easily substituted.
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Measures of intergenerational persistence can be
indicative of equality of opportunity, but the relationship is not
clear-cut
A strong association between incomes across
generations—with children from poor families likely to be poor as adults—is
frequently considered an indicator of insufficient equality of opportunity.
Studies of such “intergenerational persistence,” or lack of
intergenerational mobility, measure the strength of the relationship between
parents’ socio-economic status and that of their children as adults.
However, the association between equality of opportunity and common measures
of intergenerational persistence is not as clear-cut as is often assumed. To
aid interpretation researchers often compare measures across time and space
but must recognize that reliable measurement requires overcoming important
data and methodological difficulties.
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A mix of policies could be the solution to
reducing discrimination in the labor market
Discrimination is a complex, multi-factor
phenomenon. Evidence shows widespread discrimination on various grounds,
including ethnic origin, sexual orientation, gender identity, religion or
beliefs, disability, being over 55 years old, or being a woman. Combating
discrimination requires combining the strengths of a range of
anti-discrimination policies while also addressing their weaknesses. In
particular, policymakers should thoroughly address prejudice (taste-based
discrimination), stereotypes (statistical discrimination), cognitive biases,
and attention-based discrimination.
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Despite increasingly generous parental leave schemes their
advantages over subsidized childcare remain unclear
Most OECD countries spend substantially more on maternity leave
schemes than on early childcare. However, given high tax burdens and rapidly aging
populations, female labor force participation is critically needed. Moreover, it is important
to know whether the main beneficiaries, the children themselves, reap more benefits from one
or the other in the long term. The first cohorts exposed to the introduction or extension of
maternity/paternity leave schemes and subsidized childcare programs have now completed
education and entered the labor market, allowing an investigation of these programs’ long-term
economic effects.
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A strict policy on fertility effects every
aspect of economic life
The 20th century witnessed the birth of modern
family planning and its effects on the fertility of hundreds of millions of
couples around the world. In 1979, China formally initiated one of the
world’s strictest family planning programs—the “one child policy.” Despite
its obvious significance, the policy has been significantly understudied.
Data limitations and a lack of detailed documentation have hindered
researchers. However, it appears clear that the policy has affected China’s
economy and society in ways that extend well beyond its fertility rate.
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Relative costs and family characteristics
determine the effectiveness of different forms of childcare
Increasing population age and low fertility
rates, which characterize most modern societies, compromise the balance
between people who can participate in the labor market and people who need
care. This is a demographic and social issue that is likely to grow in
importance for future generations. It is therefore crucial to understand
what factors can positively influence fertility decisions. Policies related
to the availability and costs of different kinds of childcare (e.g. formal
care, grandparents, childminders) should be considered and promoted after an
evaluation of their effects on the probability of women having children.
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Households can benefit from international trade
as it lowers the prices of consumer goods
Imported products tend to have lower prices than
locally produced ones for a variety of reasons, including lower labor costs
and better technology in the exporting country. The reduced prices may lead
to wage losses for individuals who work in the production of a local version
of the imported item. On the other hand, lower prices may be beneficial to
households if the cheaper product is in their consumption basket. These
welfare gains through consumption, on average, are found to be larger in
magnitude than the wage effect for some developing countries.
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Hot weather can worsen reproductive health and decrease later
birth rates
Research finds that hot weather causes a fall in birth rates
nine months later. Evidence suggests that this decline in births is due to hot weather harming
reproductive health around the time of conception. Birth rates only partially rebound after
the initial decline. Moreover, the rebound shifts births toward summer months, harming infant
health by increasing third trimester exposure to hot weather. Worse infant health raises
health care costs in the short term as well as reducing labor productivity in the longer term,
possibly due to lasting physiological harm from the early life injury.
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