Childcare provided by grandparents helps young working mothers,
but reduces the labor supply of older women
Older people in developed countries are living longer and
healthier lives. A prolonged and healthy mature period of life is often associated with
continued and active participation in the labor market. At the same time, active grandparents
can offer their working offspring a free, flexible, and reliable source of childcare. However,
while grandparent-provided childcare helps young parents (especially young mothers) overcome
the negative effects of child rearing on their labor market participation, it can sometimes
conflict with the objective of providing additional income through employment for older
workers, most notably older women.
Subsidized childcare fosters maternal
employment, but employment status, childcare quality, and availability
Women’s labor force participation has rapidly
increased in most countries, but mothers still struggle to achieve a
satisfactory work−life balance. Childcare allows the primary caregiver,
usually the mother, to take time away from childrearing for employment.
Family policies that subsidize childcare and increase its availability have
different effects on female labor supply across countries. For policymakers
to determine how well these policies work, they should consider that policy
effectiveness may depend on country-specific pre-reform female employment
and earnings, and childcare availability, costs, and quality.
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.
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.
What are the implications of childcare subsidies
for care quality, family well-being, and child development?
Most public expenditure on childcare in the US
is made through a federal program, the Child Care and Development Fund
(CCDF), established as
part of landmark welfare reform legislation in 1996.
The main goal of the reform was to increase employment and reduce welfare
dependence among low-income families. Childcare subsidies have been
effective in enabling parents to work, but apparently at some cost to the
well-being of parents and children.
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 on
average to about half as much time as is spent on paid employment. Women
bear the brunt of this burden, a difference that is driven in part by the
gender differential in wages. 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 consider
ways to reduce the distortions caused by sales and income taxes.
Focus on family and portable allowances to lower
the costs of institutional long-term care while monitoring its quality
The demand for institutional long-term care is
likely to remain high in OECD countries, because of longer life expectancy
and falling cohabitation rates of the elderly with family members. As
shortages of qualified nurses put a cap on the supply of beds at nursing
homes, excess demand builds. That puts upward pressure on prices, which may
not reflect the quality of the services that are provided. Monitoring the
quality of nursing home services is high on the agenda of OECD governments.
Enlisting feedback from family visitors and introducing portable benefits
might improve quality at little extra cost.
Quality of parental time spent with children is
more important than quantity
Female labor market participation rates have
increased substantially in many countries over the last decades, especially
those of mothers with young children. This trend has triggered an intense
debate about its implications for children’s well-being and long-term
educational outcomes. The overall effect of maternal and paternal employment
on children’s cognitive and educational attainment is not obvious: on the
one hand, children may benefit from higher levels of family income, on the
other hand, parental employment reduces the amount of time parents spend
with their children.
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.
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.