Family policy as an institutional context of economic inequality

Abstract

It is demonstrated that family policies are an important aspect of the institutional context of earnings inequality among coupled households. Although seldom integrated into prominent analyses of economic inequality, women's earnings are consistently found to reduce relative inequality among households. This means that family policies, as well-known determinants of women's employment and earnings, are important contextual determinants of economic inequality. Using Luxembourg Income Study data from 18 OECD countries in the period 1981-2008, this study demonstrates that women have higher earnings, and that their earnings reduce inequality among coupled households more in institutional contexts with generous paid leave and public childcare. We found no sizeable association between financial support policies, such as family allowances and tax benefits to families with children, and the degree to which women's earnings contribute to inequality among coupled households. Family policy arrangements that facilitate women's employment and earnings are associated with less economic inequality among coupled households.

Trends in Women’s Employment and Poverty Rates in OECD Countries: A Kitagawa–Blinder–Oaxaca Decomposition

“…Despite homogamy (that causes the accumulation of high or low incomes at the household level), women's earnings attenuate to a certain degree the unequal distribution of individual incomes. So, instead of women's earnings "almost certainly increas [ing] inequalities" (Esping-Andersen 2009, p. 59), women's earnings had an equalizing impact on what is now called 'pre-distribution' (Hacker 2011;Atkinson 2015;Harkness 2013;Nieuwenhuis et al 2019). This was again confirmed by our findings.…”

“…Running counter to what can be expected based on the skewed distribution of jobs over households, the literature consistently finds that rising women's employment and earnings had an attenuating effect on inequality among couple households (Gregory 2009;Lam 1997). This has been established in studies examining how inequality among households was affected by women's earnings in single countries (Mincer 1974;Björklund 1992), across countries at one point in time (Harkness 2013), and over time within various OECD countries (Nieuwenhuis et al 2019). While this literature is limited to couple households and addresses inequality rather than relative poverty, it does provide a prior indication that increasing employment rates of women narrows the income distribution.…”

Childcare Indicators for the Next Generation of Research

“…Childcare services are accordingly considered instrumental in fostering mothers' employment (Gornick, Meyers, & Ross, 1997;Keck & Saraceno, 2013;Olivetti & Petrongolo, 2017) and greater gender equality in earnings (Evertsson et al, 2009;Grönlund & Magnusson, 2016;Nieuwenhuis, Need, & Van der Kolk, 2019). Childcare policy is moreover often promoted as a tool to reduce the risk of vulnerable families falling into poverty, by allowing mothers, and especially single mothers, to remain in employment (Maldonado & Nieuwenhuis, 2015;Misra, Moller, Strader, & Wemlinger, 2012).…”

“…Researchers have come a long way in constructing useful comparative datasets along these lines regarding cash benefits, including child benefits, paid parental leave, and family-related tax credits, (Ferrarini, 2006;Gauthier, 1996;Saraceno & Keck, 2008;Van Mechelen, Marchal, Goedemé, Marx, & Cantillon, 2011). Institutional indicators have moreover been applied to study differences in policy design between distinct welfare states (Ferrarini, 2006;Ferrarini, Nelson, & Höög, 2012;Javornik, 2014;Korpi, 2000;Marchal & Van Lancker, 2019), as well as the impact of such differences on poverty and inequality (Bäckman & Ferrarini, 2010;Keck & Saraceno, 2013;Korpi et al, 2013;Misra et al, 2012;Nieuwenhuis et al, 2019;Pettit & Hook, 2009;Van Lancker & Van Mechelen, 2015). Institutional indicators have been employed to study the extent to which policies support female, and especially maternal, employment (Hegewisch & Gornick, 2011;Nieuwenhuis et al, 2012;Pettit & Hook, 2005), and to which family policies are conducive toward independence from family relationships, in terms of defamilization (Javornik, 2014;Leitner, 2003;Leitner & Lessenich, 2007;Lohmann & Zagel, 2016; see also Chapter 6 by Zagel & Lohmann in this volume).…”

What works to mitigate and reduce relative (and absolute) inequality? A systematic review

“…Therefore, there might be tradeoffs between the aim of redistributing incomes and the objective to attract more women to the labour market. In this sense, Nieuwenhuis et al (2019) assess the impact of this type of family policy on female labour force participation in 18 OECD countries. Generous parental leave and public childcare services boost women's labour participation, which tends to reduce earnings inequality among coupled households because it is associated with lower earnings inequality among women.…”