The Paid Leave Fairy Tale

Why is the Swedish gender wage gap so stubbornly stable (and high)?

The Swedes are supposed to be in a left-wing utopia. Welfare state, ample childcare and long maternity leave but their gender wage gap is almost as bad as in 1980. They must be a misogynist throwback.

swedish gender wage gap by percentile

Maybe Megan McArdle can explain:

There are countries where more women work than they do here, because of all the mandated leave policies and subsidized childcare — but the U.S. puts more women into management than a place like Sweden, where women work mostly for the government, while the private sector is majority-male.

A Scandinavian acquaintance describes the Nordic policy as paying women to leave the home so they can take care of other peoples’ aged parents and children. This description is not entirely fair, but it’s not entirely unfair, either; a lot of the government jobs involve coordinating social services that women used to provide as homemakers.

The Swedes pay women not to pursue careers. The subsidies from government from mixing motherhood  and work are high. Albrecht et al., (2003) hypothesized that the generous parental leave a major in the glass ceiling in Sweden based on statistical discrimination:

Employers understand that the Swedish parental leave system gives women a strong incentive to participate in the labour force but also encourages them to take long periods of parental leave and to be less flexible with respect to hours once they return to work. Extended absence and lack of flexibility are particularly costly for employers when employees hold top jobs. Employers therefore place relatively few women in fast-track career positions.

Women, even those who would otherwise be strongly career-oriented, understand that their promotion possibilities are limited by employer beliefs and respond rationally by opting for more family-friendly career paths and by fully utilizing their parental leave benefits. The equilibrium is thus one of self-confirming beliefs.

Women may “choose” family-friendly jobs, but choice reflects both preferences and constraints. Our argument is that what is different about Sweden (and the other Scandinavian countries) is the constraints that women face and that these constraints – in the form of employer expectations – are driven in part by the generosity of the parental leave system

Most countries have less generous family subsidies so Claudia Goldin’s usual explanation applies to their falling gender wage gaps

Quite simply the gap exists because hours of work in many occupations are worth more when given at particular moments and when the hours are more continuous. That is, in many occupations earnings have a nonlinear relationship with respect to hours. A flexible schedule comes at a high price, particularly in the corporate, finance and legal worlds.

Mandatory Maternity Leave is a Bad Idea @suemoroney

Bridging the Gender Gap: The Problems with Parental Leave

@suemoroney more generous maternity leave increases the gender wage gap @JanLogie

Source: Why Are Women Paid Less? – The Atlantic.

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Source: AEAweb: AER (103,3) p. 251 – Female Labor Supply: Why Is the United States Falling Behind?

No country for gender equality – the Swedish gender pay gap at 10th, 50th and 90th percentile since 1980

Whatever else a generous welfare state, high taxes and lavish maternity leave may do, they haven’t made more than a scratch on the Swedish gender pay gap for 35 years at least.

Source: OECD Employment Database.

Maternity leave compared

Richard Branson has announced a great paid leave policy for .2 percent of his workers

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via Richard Branson has announced a great paid leave policy for .2 percent of his workers – The Washington Post.

The NYT must be slipping with "When Family-Friendly Policies Backfire”

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The best part of the article is its frank admission about how bare the cupboard is in dealing with the impact of generous maternity leave on the gender gap. Maternity leave should not be too generous, should not be paid by employers but by taxpayers, and should extend to both  men and women.

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via When Family-Friendly Policies Backfire – NYTimes.com.

Why is the gender gap so large and the glass ceiling so thick in Sweden?

The gender wage gap is no better than the OECD average, despite generous maternity and paternity leave. What gives?

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Source: Closing the gender gap: Act now – http://dx.doi.org/10.1787/9789264179370-en

One important question is whether government policies are effective in reducing the gap. One such policy is family leave legislation designed to subsidize parents to stay home with new-born or newly adopted children.

One of the RLE articles shows that for high earners in Sweden there is a large difference between the wages earned by men and women (the so-called “glass ceiling”), which is present even before the first child is born. It increases after having children, even more so if parental leave taking is spread out.

These findings suggest that the availability of very long parental leave in Sweden may be responsible for the glass ceiling because of lower levels of human capital investment among women and employers’ responses by placing relatively few women in fast-track career positions. Thus, while this policy makes holding a job easier and more family-friendly, it may not be as effective as some might think in eradicating the gender gap.

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via New volume on gender convergence in the labour market | IZA Newsroom.

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