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Understanding the rising trend in female labour force participation

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  • Hérault, Nicolas
  • Kalb, Guyonne

Abstract

Female labour force participation has increased tremendously since World War II in developed countries. Prior research provides piecemeal evidence identifying some drivers of change but largely fails to present a consistent story. Using a rare combination of data and modelling capacity available in Australia, we develop a new decomposition approach to explain rising female labour force participation since the mid-1990s. The approach allows us to identify, for the first time, the role of tax and transfer policy reforms as well as three other factors that have been shown to matter by earlier studies. These are (i) changes in real wages, (ii) population composition changes, and (iii) changes in labour supply preference parameters. A key result is that –despite the ongoing emphasis of public policy on improved work incentives for women in Australia and elsewhere– changes in financial incentives due to tax and transfer policy reforms have contributed relatively little to achieve these large increases in participation. Instead, the other three factors drive the increased female labour force participation.

Suggested Citation

  • Hérault, Nicolas & Kalb, Guyonne, 2020. "Understanding the rising trend in female labour force participation," GLO Discussion Paper Series 543, Global Labor Organization (GLO).
  • Handle: RePEc:zbw:glodps:543
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    More about this item

    Keywords

    female labour force participation; employment rate; tax-transfer policy; behavioural microsimulation; decomposition;
    All these keywords.

    JEL classification:

    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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