December 3-4, 2004

1
December 3-4, 2004

• A model to aspire to?
• Experiences from the Nordic countries on Parental
  Leave schemes

2
Major reforms in the Nordic countries

• Sweden 1974 Maternal leave of 3 months is
  introduced, later on in Denmark and Norway
• 1960-1990 large expansion publicly provided (and
  highly subsidized) childcare especially Denmark
  is in front
• 1 month father quota is introduced in Sweden in
  1995, in 1993 in Norway, in 1998 in Denmark (but
  dropped again in DK in 2002)
• More flexible schemes are introduced in Sweden
  and Norway later on in Denmark and Iceland
• 2001 Iceland 9 months leave
• 3 months for the mother
• 3 months of parental leave
• 3 months (only) for the father

3
Leave schemes in the Nordic countries 2004
4
Experiences from the Nordic countries on Parental
Leave schemes

• On the positive side
• Welfare of families and children
• Ageing population High female participation rate
  is needed without too negative effects on
  fertility
• OECD (Employment Outlook, 2001, Ch. 4) Praised
  the Scandinavian welfare states for their family
  friendly policies
• Scandinavian countries have been in front with
  respect to family friendly policies
• High female participation rate ...
• ... even for mothers with young children
• and fertility has not decreased far as much as
  in other OECD countries

5
Maternal leave (weeks), source OECD (2001)
6
Child care coverage () for children 0-2, source
OECD (2001)
7
Employment Rates for Women in Families with a
Child less than 6, OECD 2001
8
On the negative side

• Womens labour market career gender equality.
  The nordic countries have been in front with
  respect to womens labour force participation -
  but not with respect to gender equality in a
  number of other dimension

9
On the negative side

• Gender wage gap is low, but has not decreased
  the latest 25 years
• Low gender wage gap is mainly the result of a
  compressed wage distribution
• Gender wage gap has increased among highly
  educated groups Scandinavian women have not got
  much out of an increased educational level and
  much more labour market experience
• Women tend not to get top positions - very few
  female CEOs or professors in the Nordic countries
• But women at the bottom of the qualification
  distribution have improved their position
• The Nordic labour markets are highly segmented
  more than half of women employed in public
  sector, while only about 20 of men are publicly
  employed

10
The effects of the leave schemes recent
re-sults from Denmark and other Nordic countries

• I Lost human capital and statistical
  discrimination effects all women are punished
  when leave schemes are general with 100 coverage
  and mainly women take up these schemes (Source
  Datta Gupta and Smith, 2002)
• II. Segmentation effects The public sector
  offers more family friendly work environment
  (varies between countries). Collective
  agreements More generous leave schemes etc. At
  the expense of wage increases. Example Denmark
• 100 compensation in public sector, on average
  60 in private sector
• wages are about 14 lower in public sector
  compared to private sector for comparable jobs
• Women who intend to get children select into the
  public sector where they are not penalized as
  mothers, Source Nielsen, Simonsen and Verner
  (2004)

11
Wage profiles, Public sector (15-16 years of
education), source Nielsen et al. (2004)
12
Wage profiles, private sector (15-16 years of
education), source Nielsen et al. (2004)
13
The effects of the leave schemes recent
re-sults from Denmark and other Nordic countries

• I. Lost human capital and statistical
  discrimination effects
• II. Segmentation effects
• III. Fathers do not use parental leave! until
  father quotas are introduced
• Economic incentives for mothers, not fathers, to
  take up leave when compensations are not 100
• Fathers are less punished in regimes with father
  quotas compared to taking up parental leave Less
  signalling of being a soft man

14
Fathers do not use parental leave - until father
quotas are introduced Example from DK

• DENMARK
• Number of weeks of paternal and maternal leave
  divided by number of children born in the year,
  1982-2002,
• Source Smith (2000) and Statistics Denmark

15
In Sweden father quotas have changed the
behaviour of fathers Distribution of leave
(weeks) Source SOU 200336
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A Model to Aspire to? Yes but still many things
to do

• Maternal/parental leave
• The cost of extending leave schemes in terms of
  lost labour supply and financial costs
• Higher compensation rates will induce more
  fathers to take up leave
• More/longer father quotas?
• Forcing the family? Or parallel to discussions
  when split taxation instead of joint taxation was
  introduced (in many countries incl. UK)
• Empirical evidence The only way to get fathers
  to take up parental leave without being punished
  in the labour market
• More flexible schemes
• May be much more attractive for fathers... and
  career oriented mothers
• May not be attractive for the employers at
  least from a short run perspective
• Alternative to extended leave schemes Publicly
  provided childcare (of good standard) during
  childs first year (the welfare of the child,
  costs for the public and womens labour market
  attachment)

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Main References
OECD, Employment Outlook, 2001 (Chapter 4) Datta
Gupta, N. and N. Smith (2002), Children and
Career Interruptions The Family Gap in Denmark.
IZA discussion paper 263. Economica, 69 (276),
609-629), downloadable from ftp//ftp.iza.org/dps/
dp263.pdf Datta Gupta, N., R. Oaxaca and N.
Smith (2003), Swimming Upstream, Floating
Downstream Trends in the US and Danish Gender
Wage Gap, IZA DP 756, IZA Bonn, downloadable
from ftp//ftp.iza.org/dps/dp756.pdf Rosholm M.
and N. Smith (1996), The Danish Gender Wage Gap
in the 1980s A Panel Data Study, Oxford Economic
Papers, 48, pp. 254-79 Nielsen, H. S., M.
Simonsen and M. Verner (2004), Does the Gap in
Family-friendly Policies Drive the Family Gap?,
Working Paper 02-19, Department of Economics,
Aarhus School of Business, http//www.hha.dk/nat/W
PER/02-19_mv.pdf, forthcoming in Scandinavian
Journal of Economics Bonke, J., N. Datta Gupta
and N. Smith (2003), Timing and Flexibility of
Housework and Men and Women's Wages, IZA
Discuassion paper 860, IZA Bonn, downloadable
from ftp//ftp.iza.org/dps/dp860.pdf Pylikova,
E. And N. Smith (2004), The Impact of
Family-Friendly Policies in Denmark and Sweden on
Mothers' Career Interruptions Due to Childbirth,
IZA Discussion Paper no. 1050, IZA Bonn. Blau,
F. and L. Kahn (1997), Swimming Upstream Trends
in the Gender Wage Differential in the 1980s,
Journal of Labor Economics 15, 1-42 Albrecht,
J., Bjorklund, A. and Vroman, S. (2003), Is There
a Glass-Ceiling in Sweden?, Journal of Labor
Economics, 21 (1), 145-177