Project: FROGEE publication
Why Are Women Underrepresented in Politics: Exploring Causes and Solutions
Why are women underrepresented in politics? Despite progress in gender equality, women are still significantly underrepresented in political offices worldwide, especially in higher-level positions. This issue has drawn increasing attention in both academic and policy circles.
Recent research in economics and political science explores the key reasons why women are underrepresented in politics, often categorizing them into “supply-side” and “demand-side” factors. Supply-side factors include women’s potentially lower willingness or ability to run for political office, influenced by social norms, family responsibilities, or lack of political networks. On the demand side, voter and party leader biases against women candidates play a significant role in limiting opportunities for women to hold political office.
Understanding why women are underrepresented in politics is critical for designing effective policies that address the gender gap in political representation. Solutions such as gender quotas, political leadership training for women, and reforms to reduce bias have been proposed. We review some of these strategies and assess their effectiveness based on available evidence.
By tackling the root causes of why women are underrepresented in politics, we can create more inclusive political systems that better reflect the diverse populations they serve.
Country Reports
Belarus country report (EN) | Belarussian language version (BY) |
Georgia country report (EN) | Georgian language version (GE) |
Latvia country report (EN) | Latvian language version (LV) |
Poland country report (EN) | Polish language version (PL) |
Russia country report (EN) | Russian language version (RU) |
Ukraine country report (EN) | Ukrainian language version (UA) |
Women in Politics: Why Are They Under-represented?
Women are generally under-represented in political offices worldwide, and their under-representation becomes larger in more senior positions. Of the four dimensions considered in the World Economic Forum’s Gender Equality Index (namely, Economic Opportunity and Participation, Educational Attainment, Health and Survival and Political Empowerment), the dimension called Political Empowerment, which measures the extent to which women are represented in political office, records the poorest performance, with only 25% of an hypothetical 100% gap having been closed to date.
Importantly, although there is large variation across countries, gender inequality in political empowerment is documented in every region worldwide, including in those countries that are most socially and economically advanced. Sweden, for instance, while having a good record of women’s representation in most institutions (women currently represent 47.5% of the Parliament members, 54.5% of the ministers, and about 43% of the municipal councilors), has never had a woman as Prime minister, and only one-third of its mayors are female. Countries in Eastern Europe and Central Asia have only closed 15% of a hypothetical 100% gender gap in political empowerment, according to the World Economic Forum, by far their worst performance among the four sub-indexes that compose the overall Gender Equality Index.
Given the persistent under-representation of women in political institutions, where important decisions that shape societies are taken, economists and political scientists, among others, are increasingly interested in understanding the causes of the gender gap in political representation. In this brief, some of the recent academic literature on this question is summarized, and some policies that may help to close the gender gaps in political representation are reviewed.
Table 1. World Economic Forum Gender Equality Index. Regional Performance in 2020, by Sub-index
Why Are Women Under-represented in Political Office?
Broadly speaking, three main reasons are most often explored, namely women’s unwillingness to become politicians, voters’ bias, and parties’ bias. Below an overview of some of the work that has addressed each of these three factors is provided.
Gender Gaps in Political Ambition
Large-scale surveys have documented that women who, based on their professional and economic credentials, are potential political candidates, report lower ambition to occupy executive offices than comparable men (Fox and Lawless, 2004). The main reasons for the gender gap in ambition appear to be that
- (a) women are less encouraged to run for office than men and
- (b) women are less likely to believe that they are qualified for office than men.
Women’s tendency to shy away from competition (Niederle and Vesterlund, 2007) may also play a role since the political selection process is likely perceived as highly competitive. As Preece and Stoddard (2015) find by using two experiments, priming individuals to consider the competitive nature of politics lowers women’s interest in running for political office, whereas it has no effect on the interest of men.
Women’s willingness to advance in their political careers can also be influenced by family and relational considerations. Recent work from Folke and Rickne (2020) shows that in Sweden female politicians who are promoted to mayor (i.e. the highest office in municipal politics) experience a significant increase in the likelihood of divorcing their partner, whereas this is not the case for men. If women face higher costs for their career achievements, as the evidence in Folke and Rickne (2020) suggests, they may be discouraged from pursuing such objectives.
While there is evidence that women may on average be less willing to advance to top positions than men, it is not clear how quantitatively relevant this factor is to account for the lack of women in power. The introduction of gender quotas in candidate lists in different countries worldwide can be informative in this sense. If women’s under-representation in electoral lists is mostly due to the lack of qualified female politicians, some electoral lists (in most cases representing specific political parties) may not be able to run due to the introduction of a quota, and the average “quality” of lists, measured by some relevant (to voters) characteristics of their members, would decrease. The literature finds no evidence of either of these two responses to quotas (see Baltrunaite et al., 2014, Besley et al., 2017, Bagues and Campa, 2020). On the contrary, in Italy (Baltrunaite et al., 2014) and Sweden (Besley et al., 2017) quotas appear to have improved the “quality” of the elected politicians.
Voters’ Bias
Krook (2018) observes that the existing work in political science regarding the importance of voters’ bias in explaining women’s underrepresentation in politics leads to ambivalent conclusions. Results in the most recent economics literature confirm this assessment. Barbanchon and Sauvagnat (2019) compare votes received by the same female candidate in French parliamentary elections across different polling stations within an electoral district and find that votes for women are lower in municipalities with more traditional gender-role attitudes. They interpret this pattern as evidence of voters’ discrimination and conclude that voters’ bias matters quantitatively in explaining women’s under-representation among politicians. Conversely, Bagues and Campa (2020) find no evidence of voters’ bias against women, based on voters’ reaction to the introduction of a gender quota for electoral lists in Spain. Specifically, they study how the quota impacts the electoral performance of lists that were more affected by the quota – i.e. that were forced to increase their share of female candidates by a larger extent, due to their lower level of feminization pre-quota. They do not find evidence that such lists have worsened their relative electoral performance due to the quota. Put differently, there is no evidence that voters lower their electoral support of a list when its share of female candidates increases for exogenous reasons.
Survey data on voters’ attitudes can also help in gauging the extent to which voters discriminate against women. Based on data from the latest wave of the World Value Survey (WVS, 2017-2020), in Western Europe typically less than 20% of survey respondents express agreement with the statement “Men make better political leaders than women do” (e.g. 5% in Sweden, 9% in Denmark and Germany, 12% in Finland and France, 19% in Italy; only in Greece the share of the agreement is higher than 20%, at 26%). As shown in Figure 1, these percentages are substantially higher in Eastern Europe and Central Asia.).
Figure 1. Share of survey respondents who report to “Agree” or “Strongly Agree” with the statement “Men make better political leaders than women do”.
It bears noting, however, that answers to the WVS are not always informative about the extent to which voters’ bias prevails in a country. Where the percentage of respondents who think that men make better political leaders than women is close to or above 50%, as e.g. in Armenia, Georgia, or Russia, voters’ bias is likely to be an important factor. However, in countries with lower levels of agreement, such as for instance Poland, drawing conclusions is harder, since the WVS does not measure the share of respondents who think that women make better political leaders than men do.
Parties’ Bias
Party leaders, who often are key players in the selection of politicians, may prefer to promote male rather than female candidates. If they are aware of voters’ bias against women, preferring male candidates is consistent with a votes-maximizing strategy. However, party leaders may also act as gate-keepers and hold women back even in absence of voters’ bias. Esteve-Volart and Bagues (2012) find evidence of an agency problem between voters and parties by looking at Spanish elections. While parties tend to nominate women in worse positions on the ballot, there is no evidence that women attract fewer votes than men; moreover, when the competition is stiffer, women’s position on the ballot improves. These two facts lead the authors to conclude that the disadvantage women face can likely be attributed to parties’ rather than voters’ bias.
When considering all these factors, it is also important to note that the systematic under-representation of women in political institutions is likely self-reinforcing, due to gendered group dynamics. In the laboratory, women in male-majority teams appear significantly less likely to put their name forward as team-leaders than women in female-majority teams; they anticipate, correctly, lower support from team members (see Born et al., 2019). Female mayors in Italy are significantly more likely to be removed by their municipal councils than their comparable male colleagues; importantly, this is especially true when the share of male councilors is particularly large (Gagliarducci and Paserman, 2011). These studies suggest that, since the political arena has been historically male-dominated, gendered group dynamics can create vicious cycles of women’s under-representation.
Which Policies Can Be Used to Increase Women’s Representation in Political Institutions?
Different policies can be considered to address the various factors accounting for women’s under-representation in politics. In an attempt to address the ”supply-side’’ aspect of women’s under-representation, various non-profit organizations have offered training programs aimed at providing women with knowledge, skills, and networks to build political careers (see, for instance, NDI 2013). While reviewing the existing literature on these programs is beyond the scope of this brief, to the best of the author’s knowledge, there is little to no research-based evidence on the quantitative impact of training on women’s advancements in politics. Non-profit organizations, political parties, and researchers may fruitfully collaborate to implement and systematically test training programs.
Gender quotas are the most commonly used policy intervention, especially those regulating the composition of candidate lists, and they have been extensively studied; overall the literature suggests that quotas are more or less effective in empowering women depending on their design and the context where they are used (see Campa and Hauser, 2020 for a more comprehensive review of the economics literature on gender quotas and related policy implications). Given the nuances in the functioning of quotas, countries or regions that consider their adoption should consult with experts who know the ins and outs of such policies and combine their expertise with local knowledge of the relevant context.
The structure and distribution of power within parties are likely crucial for improving women’s political representation. Some scholars have devoted attention to the role of women’s organizations within parties. Theoretically, such organizations should favour the creation of networks and offer mentorship services, which are likely crucial to climb the career ladder in politics. In Sweden, a coalition of women from both the right and the left is credited for having pressed the Social Democrats’ into adopting their internal zipper quota by threatening to form a feminist party (see Besley et al., 2017). Women’s wings within political parties could play a similar role. Kantola (2018) notes that women’s organizations seem to be currently deemed as outdated, at least in European parties; Childs and Kittilson (2016), on the other hand, find that their presence does not seem to harm women’s promotion to executive roles within parties, a concern that has been associated with the existence of such organizations. In countries with public funding of political parties, specific funds could be directed to women’s organizations within parties.
Folke and Rickne (2020) also note that, since women in top jobs appear to face more relational and family constraints than men, policies that improve the distribution of economic roles within couples could help address the under-representation of women in positions of political power; their observation underlines the crucial role of gender-role attitudes in affecting women’s empowerment in any area of society. How can these attitudes change? An increasing amount of research is being devoted to answering this question. Campa and Serafinelli (2019), for instance, show that a politico-economic regime that puts emphasis on women’s inclusion in the labor market can change some of these attitudes. More research from different contexts and on specific policies will hopefully provide more guidance for policy makers on this important aspect, but the message from the existing research is that gender-role attitudes can be changed, and therefore policy-makers should devote attention to interventions that can influence the formation of such attitudes.
In many Western democracies, the rate of progress in women’s access to top political positions has proven especially slow. This history of Western democracies and the existence of the self-reinforcing mechanisms described above can serve as a lesson for countries in transitions, where new political organizations and institutions are emerging. In absence of specific policies that address women’s under-representation at lower levels very early on, it would likely take a very long time before gender gaps are closed at higher levels of the political hierarchy.
In conclusion, the authors observe that constant monitoring of the gender gaps in political institutions is important, even in presence of clear upward trends, since progress is rarely linear and therefore needs continuous nurturing.
About FROGEE Policy Briefs
FROGEE Policy Briefs is a special series aimed at providing overviews and the popularization of economic research related to gender equality issues. Debates around policies related to gender equality are often highly politicized. We believe that using arguments derived from the most up to date research-based knowledge would help us build a more fruitful discussion of policy proposals and in the end achieve better outcomes.
The aim of the briefs is to improve the understanding of research-based arguments and their implications, by covering the key theories and the most important findings in areas of special interest to the current debate. The briefs start with short general overviews of a given theme, which are followed by a presentation of country-specific contexts, specific policy challenges, implemented reforms and a discussion of other policy options.
Disclaimer: Opinions expressed in policy briefs and other publications are those of the authors; they do not necessarily reflect those of the FREE Network and its research institutes.
Transition and Beyond: Women on the Labour Market in the Context of Changing Social Norms
As countries brace themselves for a severe economic slowdown in response to the COVID-19 pandemic, earlier crises, such as that which followed the political transformation of Central and Eastern Europe and the former Soviet Union in the 1990s, may serve as important points of reference. While of course different in many ways, the changes that accompanied the transition affected society as a whole, but also had heterogenous effects across different groups. One particular dimension – also discussed in relation to the current COVID-19 crises – is that of relative costs and benefits for men and women respectively. In this brief, we re-examine one specific element of this, namely the developments of gender gaps in the labour market and social norms related to labour market activity.
The starting point is the fact that, at least nominally, women had a relatively strong position before the onset of transition, especially conditioning on the level of economic development of transition countries (see e.g. Campa et al. 2018). This background gives rise to several possible mechanisms and potential developments in the transition period and beyond. On the one hand, the legacy of relative gender equality creates conditions for path-dependency toward further gender equality, and the high levels of education should favour women in more competitive labour markets. On the other hand, the “centrally imposed” gender equality under state-socialism was not accompanied by actual changes of patriarchal values with respect to obligations for the household and children, and women remained responsible for these. The end of central planning could thus mean a setback for most common gender equality indicators, especially in countries with traditional divisions of family roles. In this brief, we give a quick overview of what has happened in some of these dimensions over time and across countries, starting in the years before transition.
The brief gives a short background for the specific country reviews that follow this introduction. It seems clear that the COVID-19 pandemic and its aftermath may also differently affect the lives of women and men. The experience of the post-communist transition of the 1990s shows that adopted policies may prevent gender gaps in various dimensions from growing as a consequence.
Country Reports
Belarus country report (EN) | Belarussian language version (BY) |
Georgia country report (EN) | Georgian language version (GE) |
Latvia country report (EN) | Latvian language version (LV) |
Poland country report (EN) | Polish language version (PL) |
Russia country report (EN) | Russian language version (RU) |
Expectations and Starting Conditions Around 1990
It is a well-established fact that the socialist economies of Central and Eastern Europe and the Soviet Union had much higher rates of female labour force participation than the OECD in the decades before the 1990s. Many reasons for this have been considered, ranging from the near political obligation to have a job, to the economic necessity for a family to have two wage earners, to the relatively well-developed support structures, such as child-care, for enabling female economic activities (e.g. Atkinson and Mickelwright, 1992). It is also the case that women were well-represented in higher education earlier than in the OECD.
In the very beginning of transition arguments in favour of women playing a central role in economic development were put forward based on their favourable starting position. As Fong, 1993 (p. 31) put it for the case of Russia: “Women in Russia have the capacity to play a positive role in the economic reform process, notwithstanding the tradition of concessions to women as the weaker half of the population. Women are the majority of the labor force and of the voting population. The female labor force is more highly educated than the male labor force; retraining women can take less time and be more cost−effective. Women are under−represented in declining heavy industries, and are concentrated in sectors of potential growth − commerce and trade, banking, and social services. […] In many ways, women have a clear potential of becoming leading elements in reform and a pro−active stance on women in social policy reform is called for.”
At the same time, there was awareness early on that some of the consequences of transition could be particularly negative for women unless counter measures were taken. For example, it was feared that radical cuts in the bureaucracy’s support staff, consisting almost entirely of women, would especially increase female unemployment, and also that an increased profit-motive would put higher demands on longer working hours making it particularly difficult for women to work (Moghadam, 1990, p. 29). That women’s status would be additionally affected by cutbacks in family related policies (state-provided or subsidized childcare, long maternity leaves, guaranteed return to work after maternity, and other systems that made it possible to re-concile women’s roles as workers and mothers) was also very clear; the following passage from Fong (1993), p. 31 illustrates this point: “The near−exclusive dependence on women’s domestic labor for maintaining the material well−being and comfort of the household, means that much of the cost of social protection of the young, the old and the disabled is borne by women in the context of the family, through a system of labor market concessions. The transformation to a market economy has made these labor market concessions incompatible with the efficient operation of the enterprise, and necessitates a re−examination of family policy in the interest of the free movement of labor.” In short, in some dimensions, women were clearly in a favourable position, at least when compared to most OECD countries. They had been active and comparatively well represented in the labour market, often in sectors that were viewed as growing; they also had comparatively high levels of education.
So What Happened?
The economic turmoil in the first half of the 1990s has been well documented and it has been well known that the economic recovery and further development in the region has been very uneven across countries (see, e.g. Svejnar 2002; Campos and Coricelli, 2002, special issue of Economics of Transition, Vol 26:4). This heterogeneity has also been reflected in the pattern of relative changes in socio-economic outcomes for men and women (see e.g. Brainerd 2000, Fong 1996, Razzu 2015, and UNICEF 1999). The female/male labour force participation (LFP) rates have in many cases dropped relative to the early 1990s, but the changes in most countries have not been as dramatic as some expected. In many countries relative female participation rates over 25 years after the start of the transition are higher or similar to those in the early 1990s (see Figure 1A). Looking at the country rates in 2017 and comparing them to the – growing – relative average OECD values it must be noted that it is generally the developed Western countries which in terms of the relative employment rates have been catching up with those of the “Eastern block”. Such a trend has also been noted in the comparison between the former East and West Germany – with the female/male participation ratio falling in the East from 61.2% in 1991 to 54.3% in 2010, at a time when the ratio in the former Western regions of the country grew from 45.4% to 52.0% (Statistisches Bundesamt, 2019).
Data on childcare suggests that the negative scenario of significant reductions in enrolment in nurseries and kindergartens did not universally materialise in the region. Although reductions in nursery enrolment were substantial in countries where the rates were high prior to transition (esp. in the countries of the former Soviet Union), drops in nursery enrolment in the countries of Central Europe, in which they in any case were lower prior to 1990s, were modest. Comparing rates of kindergarten enrollment in 1989 and 1997 in countries such as Poland, Bulgaria or Hungary, shows that they remained essentially unchanged, while they dropped from 78% to 65% in Russia (data from UNICEF 1999). From this point of view, transition brought more substantial changes in this regard in countries further to the East with kindergarten enrolment falling from 44% to 19% in Georgia and from 52% to 12% in Kazakhstan. Thus, while certainly not uniform across the region, the withdrawal of the state from the provision of care services in several countries certainly played a role in changing the relative position of women on the labour market. The implications of these developments may have been further corroborated by the fact that it is in these countries where social norms have been strongly skewed towards the home and family rather than professional life as the key responsibilities of women.
With regard to the relative dynamics of wages in Figure 1B we show a long-term series of averages of the female-male wage ratio for a subset of “old” EU members and some “new” post-transition EU countries. These are set against the ratios from the US, Russia and Ukraine. One clearly needs to be cautious concerning the possible effect of labour market selection which can affect these averages, but the overall picture for the years available is rather positive for the group of the Soviet-block countries which joined the EU.
Figure 1A. Female-male labour force participation
Figure 1B. Female-male wage ratios
The EU group averages show a generally growing trend in relative wages, but for a significant part of the analysed period the “new” EU countries have outperformed the “old” EU average, while both groups have had significantly higher rates than the US. In the years after 2010 it looks like the ratio in the “old” and “new” EU countries have converged. The figures show, however, that in countries further to the East, such as Russia and Ukraine, significant challenges remain with regard to wage inequality despite the very high participation of women.
The Changing Context of Social Norms
While labour demand conditions, as well as the available pay offer and labour market constraints, are crucial determinants of relative labour market participation rates and the gender pay gap, the prevailing social norms create the context for all of these forces, determine the supply of labour and play a significant role in determining the relative importance of constraints such as childcare for men and women. As data from the European Values Survey suggests, social norms in the region have been changing along many dimensions, and by 2017 attitudes regarding female labour market participation have become significantly less traditional. For example (see Figure 2A) while in Hungary, Czech Republic, Poland and Lithuania the range of people agreeing with the statement that “When jobs are scarce men should be given priority” was between 42.4% and 66.3% in 1990, by 2017 it dropped to less than 23% in all four countries.
In 1990, in Estonia, Lithuania and Poland over 90% of individuals believed that “A preschool child suffers if his/her mother works”. By 2017 this ratio fell to around 50% in Lithuania and Poland and to ca. 24% in Estonia. The numbers are still very high in comparison to Sweden – considered as one of the champions of gender equality – where in 2017 only 14.2% of individuals agreed with the first statement and only 2.3% agreed with the second, yet changes towards a less traditional division of responsibilities regarding home and market are evident across nearly the entire region.
Figure 2A.Social norms: women at work, 1990-2017
Figure 2B. Social norms: what most women really want: 1999-2017
Social norms have also been changing with regard to the perception of women’s aspirations. In this dimension, again, the countries of Central and Eastern Europe still remain behind Sweden, but recognition of women’s professional aspirations is apparent in nearly all countries. While in 1999 85.9% of Russians believed that “A job is alright but what most women really want is a home and children”, the number dropped to 59.8% by 2017. In Poland, the proportions dropped from 74.9% to 56.7% while in Lithuania, which appears to be the most conservative country along this dimension, from 92.7% to 82.5%. Taking Sweden as the yardstick – with only 17.8% agreeing with this statement in 2017 – the countries of the region are still some distance away from recognizing the role of female professional aspirations, but the direction of changes in social norms is clearly towards a more balanced perception of women’s role on the labour market.
Prospects for the Future and the Role for Policy
At the onset of transition, many of the countries in the region were doing relatively well in terms of gender gaps in a number of dimensions. The developments thereafter show great diversity, with some front-runners as well as some laggards. This is true both in terms of overall economic development, as well as for the relative developments on the labour market for men and women. Gender gaps in employment and wages in the countries of Central Europe which have joined the European Union have generally been low, and conditions for women in many of these countries did not worsen to a greater extent than they did for men, and they have been improving for both in recent years. The situation seems much more challenging in the republics of the former Soviet Union which remain outside of the EU. Despite high female employment levels in countries such as Russia or Ukraine, female wages continue to be much lower than those of men, and labour market constraints tend to concern women much more than men. Social norms with regard to female labour market participation and women’s aspirations may hamper the continued progress of women on the labour market in many countries of the region.
Several broad policy areas could be helpful in assisting the change towards more inclusive and equal labour markets. Governments should take a more active role in reducing constraints related to care – both for the youngest children and for older people, and policies should put further emphasis on enforcing equal pay between men and women. Rebalancing of family responsibilities through care policies can directly influence female employment and can have an indirect effect through changes in social norms (Unterhofer and Wrohlich 2017). Governments could also support dual-earner families through tax and benefit policies. As countries in the region prepare to address the challenges of the COVID-19 pandemic and its aftermath, the implemented policies should seriously consider their relative implications for men and women in order to use the expected wave of reforms to support greater equality of opportunities as well as of social and economic outcomes.
About FROGEE Policy Briefs
FROGEE Policy Briefs is a special series aimed at providing overviews and the popularization of economic research related to gender equality issues. Debates around policies related to gender equality are often highly politicized. We believe that using arguments derived from the most up to date research-based knowledge would help us build a more fruitful discussion of policy proposals and in the end achieve better outcomes.
The aim of the briefs is to improve the understanding of research-based arguments and their implications, by covering the key theories and the most important findings in areas of special interest to the current debate. The briefs start with short general overviews of a given theme, which are followed by a presentation of country-specific contexts, specific policy challenges, implemented reforms and a discussion of other policy options.
Economics of Childbearing and Pronatalist Policies
The brief opens a series of FROGEE Policy Briefs aimed at providing overviews and the popularization of economic research related to gender equality issues. The current brief introduces the general rationale behind fertility decisions and policy interventions. It summarizes the economic literature on the effects of different types of policy interventions on enhancing childbearing. The brief is followed by country reports presenting country-specific contexts, various policy challenges, implemented reforms and a discussion of other policy options covering childbearing.
Country Reports
Belarus country report (EN) | Belarussian language version (BY) |
Georgia country report (EN) | Georgian language version (GE) |
Latvia country report (EN) | Latvian language version (LV) |
Poland country report (EN) | Polish language version (PL) |
Russia country report (EN) | Russian language version (RU) |
Ukraine country report (EN) | Ukrainian language version (UA) |
Introduction to Economics of Childbearing
From an economic point of view, there are several potential reasons why public policy interventions concerning fertility may be beneficial for society and why – when left without support – decisions of parents might be suboptimal from the social point of view. In order to better understand these, one must first consider the intuition behind the theoretical economic approach to family relations in general and to fertility decisions in particular, much of which draws on the seminal contributions of Gary Becker (Becker & Lewis 1973; Becker & Tomes 1976).
In economics, goods are any real objects that satisfy people’s needs and typically come at some cost. Becker’s approach to the family extends this reasoning to human relations and presents decisions on partnership, divorce and family formation in the context of ‘economic’ trade-offs between costs and benefits. Since having children is associated with considerable costs (both in terms of money and time) as well as gains in a number of dimensions, the decision to have a child can be formulated as an economic decision. However, viewed from this perspective, the choice to have children turns out to be special in several dimensions.
Negative Income-Fertility Relationship and Low Fertility
One of the most robust observations regarding fertility is that – in contrast to many other types of expenditures – there is a strong negative association between earnings and the number of children (Figure 1). This negative income-fertility relationship has been observed in every developed nation, both when examined over time in relation to income growth and when looked at in a cross- country comparisons (see Jones et al. 2011). Figure 2 shows this relationship in a broad macro perspective: historically, as the world’s per capita GDP has grown fertility rates have tended to decline.
There are several potential drivers behind the above relationship. Two of the most established explanations are opportunity cost and quality- quantity trade-off, and they relate to several special features of the costs and benefits of having a child and the very nature of the family.
Figure 1. The relationship between total fertility rate and GDP per capita
Source: World Bank.
Figure 2. Trends in total fertility rate by region, 1950-2050.
Source: World Bank.
Money and Time Costs
A rather unique property of family formation is that costs related to childbearing are expressed both in terms of money and time. Because of the latter, high-earning parents face higher opportunity costs of the time necessary to raise a child. This might not only contribute to the aforementioned negative fertility-income relationship but has also been shown as one of the main reasons behind low fertility in developed countries. One of the most common policies used to increase fertility is money transfers which come in the form of family allowances, baby bonuses or tax credits. According to the UN Population Facts, at least 96% of developed nations have this type of policy. OECD countries, on average, spend around 4% of their GDP on this kind of assistance and the average effect of such interventions has been estimated to increase the total fertility rate (TFR) by 0.08 – 0.35 (Luci-Greulich & Thevenon 2011). The main reason why one needs to spend a lot of money to gain a relatively small increase in TFR is that low fertility is a «first world» problem, i.e. most of the targeted individuals are not bounded by the monetary costs of a child.
Policies that take the time-cost of children into account promise a higher potential effect in developed countries. For example, Raute (2019) uses German data to find an 18% increase in fertility among women with earnings above the median after the introduction of earnings- dependent paid maternity leave policy.
Quality — Quantity Trade-off
In economics, the idea that education, health and other factors increase human productivity and potential is conceptualized in a notion of “quality of human capital”. As the return on investment in human capital rises, parents may choose to have fewer children and focus their time and financial ‘investments’ in their quality. Some of the most convincing evidence on the strength of the quality- quantity trade-off was revealed using the data on twin births and on family sizes by Hanushek (1992) and Li et al. (2008).
Cultural Norms
Relatively recent research on the determinants of fertility has documented the substantial and persistent influence of cultural norms on fertility. This is reflected in the variation of fertility levels within countries among people of similar financial status, but coming from different cultural backgrounds. For example fertility levels among immigrants in the developed world tend to resemble those in their countries of origin (see, e.g. Beach & Hanlon 2019, Families and Societies 2015), and while cultural norms change and can also be affected by the policy environment (Bassi & Rasul 2017), there tends to be a substantial degree of time-dependence in how norms evolve and adjust.
Internal Costs and External Benefits
The last special feature of childbearing from an economic perspective is that although most of the costs in terms of time and money related to children are borne by parents, a large portion of future economic gains of an additional person is external to the family and benefits the wider society. When an adult enters the labor force, begins to produce goods and services for other people and pays taxes to the government, his or her parents would not be able to capture any significant portion of these benefits (Schoonbroodt & Tertilt 2014). From an economic perspective this suggests that the social value of children is higher than the private (parental) one. This situation is one of the main arguments for public policy intervention with regard to fertility. Whenever social benefits outweigh private benefits, subsidizing private choices may result in overall welfare improvements.
Fertility Enhancing Policies: What Works and What Doesn’t?
From the perspective of encouraging fertility, there is a wide range of options available to policymakers. On the one hand paid parental leave and subsidized childcare can mitigate the conflict between career and parenthood, while the introduction of paternal leave attempts at balancing out the time out of work between the two parents and at changing their allocation of time to childcare. On the other hand, child-related money transfers are aimed at reducing financial constraints on families who limit or postpone fertility because of their financial status.
In practice it is often hard to measure the effects of particular fertility-enhancing policies due to the lack of data and an absence of specific policy implementation designs, which would allow policy evaluation. However, there is evidence that fertility-enhancing policies can be successful in stimulating fertility. Luci-Greulich & Thevenon (2011) find that the most effective cash transfers are those targeted at the youngest children (aged 0-3), while those that are paid out around the birth appear to be less efficient. A number of studies prove the positive impact of transfers to families with children on fertility rates (d’Addio & d’Ercole 2005, Ermisch 1998, Milligan 2005, Whittington 1992, Whittington et al. 1990). Developments over the recent decades in Sweden are often used as an example of a successful family focused package, although given the multitude of different schemes running at the same time it is difficult to disentangle their specific implications (see Björklund 2006 for the evidence from Swedish policy reforms and Luci-Greulich & Thévenon 2013 for a broader overview of the existing research on fertility-enhancing policies).
Kalwij (2010) and Raute (2019) focus their attention on policies which alleviate career — parenthood trade-offs. Raute (2019) finds especially large effects of the adequate compensation of forgone earnings of high earning women (the author also contributes a comprehensive literature review of studies on the effects of alleviating the opportunity cost of children). Doepke and Kindermann (2016) complement these findings by providing evidence that fertility is especially responsive to policies that specifically reduce the childcare burden for women.
The evidence on the effects on fertility of another popular type of family policy, maternity leave, is less clear. Since most of the developed nations nowadays do have paid maternity leave, it is hard to measure the effect of its availability on the decision to have children. However, different durations of maternity leave across countries and changes in those durations allow economists to draw some conclusions. Although some researchers do find a positive effect of maternity leave duration (Adserà 2004), others fail to support this conclusion using different sources of data and experimental designs (d’Addio and d’Ercole 2005, Olivetti and Petrongolo 2017).
Concluding Remarks
A better understanding of the economic approach towards family formation and fertility can be helpful in thinking of a re-design of family-focused policy packages. It is beyond the scope of this brief to provide a full overview of the extensive body of economics research on this topic, but the evidence tends to suggest that a set of successful policy tools to encourage fertility is available. The basic concepts presented here can hopefully serve as background to a systematic and evidence-based discussion on public policy in this field. It should be noted that since parenthood is one of the most important choices in the life of many people, it is inherently related to many other individual choices and outcomes. Therefore, any policy aimed at increasing fertility will inevitably affect other important dimensions such as income inequality, taxation, gender equality, health and child development, among others. This means that any public intervention should always carefully consider its potential positive and negative side effects.
About FROGEE Policy Briefs
FROGEE Policy Briefs is a special series aimed at providing overviews and the popularization of economic research related to gender equality issues. Debates around policies related to gender equality are often highly politicized. We believe that using arguments derived from the most up to date research-based knowledge would help us build a more fruitful discussion of policy proposals and in the end achieve better outcomes.
The aim of the briefs is to improve the understanding of research-based arguments and their implications, by covering the key theories and the most important findings in areas of special interest to the current debate. The briefs start with short general overviews of a given theme, which are followed by a presentation of country-specific contexts, specific policy challenges, implemented reforms and a discussion of other policy options.