## Conclusion

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---

### Key takeaways
- Two contrasting demographic trends create global economic challenges:
  - Aging populations in advanced economies and emerging markets.
  - Rapidly growing young populations in many low-income and developing countries (LIDCs).
- Gender equality can help rebalance demographic trends:
  - In advanced economies and emerging markets: increasing female labor force participation to offset shrinking labor forces and support fiscal sustainability.
  - In LIDCs: narrowing gender gaps in education and health to build human capital, support productivity and GDP growth, and reduce income inequality.
- Household time and resource constraints are central because decisions on fertility, education, and labor participation are interlinked.

### Stylized facts on demographic trends
- Old-age dependency ratio (population above 64 relative to population aged 15–64):
  - Has more than doubled over the past 60 years.
  - "Now stands above 30 percent for the average advanced economy."
  - About half of the increase occurred over the past two decades.
- Projections:
  - Old-age dependency ratios projected to rise steeply over the next several decades, more than doubling in the next 50 years under the United Nations Population Division’s medium-fertility scenario.
  - Under low-fertility assumptions, the average old-age dependency ratio in advanced economies is projected to reach "100 percent by 2090."
  - Country examples: Japan and Korea old-age dependency ratio would exceed "60 percent in the next two decades"; China "could exceed 140 percent by 2084 under the low-fertility assumption."
- LIDCs:
  - Young-age dependency ratio (population below age 15 relative to population aged 15–64) "has been declining since the mid-1990s but remains high at close to 70 percent."
  - Under a constant-fertility-rate scenario, the young-age dependency ratio would remain elevated, implying substantial population growth and pressures on basic services.
- Regional projections (medium-fertility assumption):
  - European region’s population expected to shrink.
  - Western Hemisphere expected to see only marginal increases.
  - Asia and Pacific would remain the most populous region despite an overall decreasing population.
  - Sub-Saharan Africa and countries in the Middle East and Central Asia would see about a doubling of their population over the next five decades.
  - By 2035, net number of sub-Saharan African citizens entering the labor market expected to exceed the net entries from the rest of the world combined.

### Trends in labor force participation and gender gaps
- Over the past 20 years:
  - The gender gap in labor force participation decreased by "almost 8 percentage points in advanced economies," driven largely by an increase in female labor force participation.
  - In emerging markets and LIDCs, the gender gap remained relatively stable.
  - During the COVID-19 pandemic, the gap increased in many countries; emerging markets continue to see a widening gap.
- Definitions/data notes:
  - Dependency ratios use ages "15–64 years" for working-age population.
  - Labor force participation figures use International Labour Organization-modeled estimates and UN population weights.

### Economic impacts of population aging and mitigation via female labor force participation
- Population aging projected to cause significant GDP losses by 2050 for many advanced economies and emerging markets if labor market participation and structure remain unchanged.
- Baseline (United Nations medium-fertility projections; no change in labor market participation):
  - The median advanced economy faces output losses in the second half of the 2020s.
  - More than a quarter of advanced economies will experience a "GDP loss of more than 25 percent by 2050."
  - More than a fourth of emerging markets are projected to experience an output decline in the next decade.
- Raising female labor force participation can:
  - Mitigate these GDP losses.
  - Boost tax revenues and pension contributions, improving pension-system sustainability.
  - Short-run effect: new job entrants pay taxes and contribute to pensions.
  - Long-run effect: higher participation reduces the share relying on pension income for a given age structure.
- Empirical example:
  - Japan during "Abenomics": female labor force participation increased from "63 percent in 2012 to 74 percent by 2022" and was a major contributor to per capita GDP growth.

### Scenarios analyzed for female labor force participation (methodology and outcomes)
- Method follows Ostry and others (2018) to calculate GDP changes from population changes and increased female labor force participation.
- Scenario 1 (immediate increase to peer levels):
  - Advanced economies: gender gap in labor force participation reduced to be "no more than 7 percentage points."
  - Emerging markets: gender gap narrowed to be "no more than 10¼ percentage points."
  - Result: Long-run realistic increases could partially mitigate GDP losses for the median advanced economy and significantly boost GDP for the median emerging market.
- Scenario 2 (gradual increase over two decades):
  - Targets same participation levels as Scenario 1 but spread from "2023 to 2043."
  - Result: For the median advanced economy, this gradual increase can "nearly offset the GDP losses due to population decline from 2023 to 2030."
- Country heterogeneity:
  - Australia, the United Kingdom, and the United States projected to see positive population growth under medium-fertility assumptions; increasing female participation would complement expanding labor forces.
  - China, Germany, Italy, Japan, and Korea have negative population growth contributions to GDP; increasing female participation could lessen projected GDP decline for a few decades.

### Methodology notes (production function and calibration)
- Population inputs: United Nations Population Division fertility projections (constant-, median-, low-, high-fertility variants).
- Labor inputs: ILO male and female labor force participation data.
- Production function (notation preserved from source):
  푌푌
  푡푡
  =푁푁
  푡푡
  ��퐿퐿
  푡푡
  male
  �
  휎휎−1
  휎휎
  +�휃휃퐿퐿
  푡푡
  female
  �
  휎휎−1
  휎휎
  �
  휎휎
  휎휎−1
- Calibration matches Ostry and others (2018) with the highest substitutability between female and male labor inputs, providing a lower boundary of potential gains from increasing female labor force participation.

### Gains from narrowing gender gaps in education in LIDCs
- LIDCs often face low education attainment, gender gaps in enrollment, weak health outcomes for women and girls, and high adolescent fertility rates.
- Specific statistic:
  - In 2021, there were 81.3 births per 1,000 women aged 15–19 years (unweighted average of 56 LIDCs).
- Model-based country results (Dynamic General Equilibrium Life-Cycle Model with heterogeneous agents):
  - Senegal: ensuring all children receive at least 5 years of education could raise GDP by 8 percent.
  - Nigeria: lifting girls’ education in each income quintile to that of boys would boost GDP by 5 percent.
  - Sierra Leone: closing gender gaps in education for each income quintile could increase GDP by 8 percent.
  - Niger case study:
    - Girls and boys spend on average 1.7 and 2.8 years in school, respectively.
    - About 45 percent of girls drop out of primary school.
    - More than three in four women get married by age 18.
    - Equalizing girls’ and boys’ education levels by income percentile triggers:
      - increase in household mean labor income of 8.6 percent;
      - GDP rises by 11.2 percent;
      - household consumption rises by 3 percent.
    - Fiscal implications in the Niger analysis:
      - government would need to increase public education spending by 21.2 percent;
      - total government spending would rise by 3 percent;
      - total tax revenue would increase by 11.3 percent, providing more than enough resources to cover new education expenditures;
      - implied reduction in the primary deficit of 9.3 percent.

### Policy implications and recommended focus
- Core insight: household decisions on education, work, and fertility are joint and constrained by preferences, time, and resources. Policies should target time and resource constraints to influence choices.
- General policy guidance by demographic context:
  - Advanced economies and emerging markets: facilitate women’s work–life choices and boost female participation in the labor market.
  - LIDCs: narrow gender gaps in opportunities and support human capital accumulation (education, health, access to services).
- Policy levers to alleviate time and resource constraints:
  - Correct unequal distributions of care burdens (infrastructure: electricity, water, sanitation).
  - Encourage greater male involvement in unpaid work (mandatory parental leave, incentives).
  - Marketize care (child and elderly care) to create paid jobs and reduce household time burdens.
  - Subsidize childcare to reduce costs and increase usage.
  - Subsidized education programs (school feeding) to reduce household resource and time constraints.
  - Move from family to individual taxation to relax resource constraints for women entering the labor market, combined with measures addressing time constraints (e.g., childcare) to avoid restricting fertility choices.
- Expected fiscal and macro benefits:
  - Increased female labor force participation raises tax revenues and pension contributions.
  - Narrowing gender gaps in education and health in LIDCs can help realize a "demographic dividend," support productivity, and bolster fiscal revenues.

### Advanced economies and emerging markets — selected policy evidence
- Childcare and marketization of care:
  - Simulation: investing 2 percent of GDP in public-care services would create more jobs than an equivalent investment in construction in the United Kingdom, the United States, Germany, and Australia; such investment could create almost as many jobs for men and up to four times as many jobs for women.
  - United States evidence (1997–2002): increase in female wage income due to higher labor force participation by mothers more than compensated for the cost of subsidizing childcare.
  - Japan: public childcare support helped improve female labor force participation and contributed to per capita GDP growth.
- Parental leave design:
  - Only 16 percent of countries offer incentives to encourage paternity leave (World Bank 2024).
  - Examples of reforms:
    - Sweden: parental leave portion set aside exclusively for fathers under a “use it or lose it” principle.
    - Germany: quota reserve for each parent increased fathers taking at least two months of paid leave.
- Labor market structure and flexibility:
  - Median gender gap in labor force participation: more than 10 percent in advanced economies and almost 21 percent in emerging markets.
  - Flexible work arrangements can help combine labor force and fertility choices; remote-capable work fell from 60 percent fully on-site in 2019 to 20 percent in 2023.

### Private‑sector and national policy examples (Western Balkans and Moldova)
- "Expanding Choices" project (December 2019–November 2023) by UNFPA with ADC funding, covering Albania, Kosovo, and Moldova:
  - 19 “Champion Companies” initiated family-friendly initiatives, benefiting over 13,600 employees and their families.
  - Legislative changes in Moldova (July 2022): childcare leave shareable between parents, extended paternity leave request period, changes to child-raising allowance, and flexible work schedule regulated in the Labor Code.
  - Awareness campaigns reached over 4.5 million individuals online.

### Limitations
- Other policy avenues such as migration could mitigate demographic challenges but are "beyond the scope of this note."
- The note does not discuss trade-offs between different policy solutions (for example, migration versus increased gender equality).

*IMF | Gender Note NOTE/2024/002 — Promoting Gender Equality and Tackling Demographic Challenges (Jiajia Gu, Lisa Kolovich, Jorge Mondragon, Monique Newiak, and Michael Herrmann), June 2024*

### Conclusion..............................................................................................................

### Conclusion

### Key takeaways
- Two contrasting demographic trends create global economic challenges: aging populations in advanced economies and emerging markets, and rapidly growing young populations in many low-income and developing countries (LIDCs).
- Gender equality can help rebalance demographic trends by:
  - In advanced economies and emerging markets: increasing female labor force participation to offset shrinking labor forces and support fiscal sustainability.
  - In LIDCs: narrowing gender gaps in education and health to build human capital, support productivity and GDP growth, and reduce income inequality.
- Policies that relax household time and resource constraints are central because household decisions on fertility, education, and labor participation are interlinked.

### Stylized facts on demographic trends
- The old-age dependency ratio (population above 64 relative to population aged 15–64) has:
  - More than doubled over the past 60 years.
  - "Now stands above 30 percent for the average advanced economy."
  - About half of the increase occurred over the past two decades.
- Projections:
  - Old-age dependency ratios are projected to rise steeply over the next several decades, more than doubling in the next 50 years under the United Nations Population Division’s medium-fertility scenario.
  - Under low-fertility assumptions, the average old-age dependency ratio in advanced economies is projected to reach "100 percent by 2090."
  - Country examples: in Japan and Korea the old-age dependency ratio would exceed "60 percent in the next two decades"; in China it "could exceed 140 percent by 2084 under the low-fertility assumption."
- For LIDCs:
  - The young-age dependency ratio (population below age 15 relative to population aged 15–64) "has been declining since the mid-1990s but remains high at close to 70 percent."
  - Under a constant-fertility-rate scenario, the young-age dependency ratio would remain elevated, implying substantial population growth and pressures on basic services.
- Regional projections under the medium-fertility assumption:
  - The European region’s population is expected to shrink.
  - The Western Hemisphere region is expected to see only marginal increases.
  - Asia and Pacific would remain the most populous region despite an overall decreasing population.
  - Sub-Saharan Africa and countries in the Middle East and Central Asia would see about a doubling of their population over the next five decades.
  - By 2035, net number of sub-Saharan African citizens entering the labor market is expected to exceed the net entries from the rest of the world combined.

### Trends in labor force participation and gender gaps
- Over the past 20 years:
  - The gender gap in labor force participation decreased by "almost 8 percentage points in advanced economies," driven largely by an increase in female labor force participation.
  - In emerging markets and LIDCs, the gender gap remained relatively stable.
  - During the COVID-19 pandemic, the gap increased in many countries, and emerging markets continue to see a widening gap.
- Definitions and data notes:
  - Dependency ratios use ages "15–64 years" for working-age population.
  - Labor force participation figures use International Labour Organization-modeled estimates and UN population weights.

### Economic gains from increasing female labor force participation in aging societies
- Population aging is projected to cause significant GDP losses by 2050 for many advanced economies and emerging markets if labor market participation and structure remain unchanged.
- Baseline: United Nations medium-fertility population projections and no change in labor market participation.
  - The median advanced economy faces output losses in the second half of the 2020s.
  - More than a quarter of advanced economies will experience a "GDP loss of more than 25 percent by 2050."
  - More than a fourth of emerging markets are projected to experience an output decline in the next decade.
- Increasing female labor force participation can mitigate these losses and also boost tax revenues and pension contributions, improving pension-system sustainability.
  - Women are noted to be more tax compliant than men (citations in source).
  - Short-run effect: new job entrants pay taxes and contribute to pensions, alleviating immediate burdens.
  - Long-run effect: higher labor force participation reduces the share relying on pension income for a given age structure.

### Scenarios analyzed for female labor force participation (methodology and outcomes)
- Approach follows Ostry and others (2018) to calculate changes in GDP from population changes and increased female labor force participation.
- Scenario 1: Immediate increase in female labor force participation to match best-performing peers:
  - Advanced economies: gender gap in labor force participation reduced to be "no more than 7 percentage points."
  - Emerging markets: gender gap narrowed to be "no more than 10¼ percentage points."
  - Result: Long-run realistic increases could partially mitigate GDP losses for the median advanced economy and significantly boost GDP for the median emerging market.
- Scenario 2: Gradual increase over two decades:
  - Targets same participation levels as Scenario 1 but spread from "2023 to 2043."
  - Result: For the median advanced economy, this gradual increase can "nearly offset the GDP losses due to population decline from 2023 to 2030."
- Country heterogeneity:
  - Australia, the United Kingdom, and the United States projected to see positive population growth under medium-fertility assumptions; increases in female participation would complement expanding labor forces.
  - China, Germany, Italy, Japan, and Korea have negative population growth contributions to GDP; increasing female labor force participation could lessen projected GDP decline for a few decades.
  - Example: In Japan during the "Abenomics" period, female labor force participation increased from "63 percent in 2012 to 74 percent by 2022" and was a major contributor to per capita GDP growth.

### Policy implications and recommended focus
- Core insight: household decisions on education, work, and fertility are joint and constrained by preferences, time, and resources. Policies should target time and resource constraints to influence choices.
- General policy guidance by demographic context:
  - Advanced economies and emerging markets: policies should "facilitate women’s work–life choices and boost female participation in the labor market."
  - LIDCs: policies should focus on reforms that "narrow gender gaps in opportunities and support human capital accumulation" (education, health, access to services).
- Expected fiscal and macro benefits:
  - Increased female labor force participation can raise tax revenues and pension contributions.
  - Narrowing gender gaps in education and health in LIDCs can help realize a "demographic dividend," support productivity, and bolster fiscal revenues.

### Limitations
- Other policy avenues such as migration could mitigate demographic challenges but are "beyond the scope of this note."
- The note does not discuss trade-offs between different policy solutions, such as migration versus increased gender equality.

*IMF | Gender Note NOTE/2024/002 — Promoting Gender Equality and Tackling Demographic Challenges (Jiajia Gu, Lisa Kolovich, Jorge Mondragon, Monique Newiak, and Michael Herrmann), June 2024*

### 1. AEs: Change in GDP due to Population Change

### 1. AEs: Change in GDP due to Population Change

### Scenarios of population declines and increased female labor force participation
- Figures present percentage change in GDP under scenarios that combine population trajectories and increases in female labor force participation (FLFP).
- Time horizon shown spans 2023 to 2050 with intermediate years plotted (2023, 2026, 2029, 2032, 2035, 2038, 2041, 2044, 2047, 2050).
- Displayed distributions include:
  - Interquantile Range
  - 10th and 90th Percentile
  - Median
- Scenario assumptions:
  - Population follows United Nations Population Division’s median population growth projection.
  - Female labor force participation targets are set such that countries achieve a gender gap no higher than that for the 10 percent of countries with the smallest labor force participation gaps in the income group.
  - For advanced economies (AEs), the gender gap in labor force participation is assumed to be no more than 7 percent.
  - For emerging markets (EMs), the gender gap in labor force participation is assumed to be no more than 10¼ percent.
- Figure 4 caption: "Scenarios of Population Declines and Increased Female Labor Force Participation, Select Countries (Percentage change in GDP)."
- Sources for scenarios and figures: United Nations Population Division; ILO; and IMF Staff Calculations.

### Key scenario outcomes (as presented)
- Figures 3 and 4 illustrate:
  - Output changes resulting solely from population changes.
  - Output changes from an immediate rise in female labor force participation.
  - Output changes from a transitional increase in female labor force participation.
- Visual axis markers included in figures denote percentage change ranges (examples shown in source):
  - Negative side: -40%, -30%, -20%, -10%
  - Positive side: 0%, 10%, 20%, 30%, 40%, 50%, 60%
  - Smaller-range axis in other panels: -30%, -25%, -20%, -15%, -10%, -5%, 0%, 5%, 10%, 15%
  - Another panel shows -8%, -6%, -4%, -2%, 0%, 2%, 4% with years 2023–2050.

### Policy implication (implicit from scenarios)
- Increasing female labor force participation to the target gender-gap thresholds is modeled to generate potential output gains under different demographic trends; gains depend on the timing (immediate vs transitional) and on underlying population trajectories.

### Sources and notes for figures
- Sources: United Nations Population Division; ILO; and IMF Staff Calculations.
- Note: Assumes United Nations Population Division’s median population growth projection. FLFP = female labor force participation; GDP = gross domestic product.

---

### Methodology: Estimating the impact of gender gaps in labor force participation on GDP (Box 1)
- Objective: Expand on Ostry and others (2018) to examine how changes in labor force participation over time under four population growth scenarios drive potential changes in GDP.
- Population inputs: Fertility projections from the United Nations Population Division based on constant-, median-, low-, and high-fertility variant assumptions.
- Labor inputs: Male and female labor force participation data from the International Labour Organization (ILO).
- Exercise quantifies potential output gains from increasing female labor force participation to different targets (for example, peer country or fixed rate of improvement) under different time spans.
- Outputs considered:
  - Baseline: potential output changes driven solely by change in population (compared to a scenario without population growth, holding other factors constant).
  - Scenarios: potential output changes from combined changes in population and increases in female labor force participation, holding other factors constant.
- Production function (as presented in source, exact notation preserved):
  푌푌
  푡푡
  =푁푁
  푡푡
  ��퐿퐿
  푡푡
  male
  �
  휎휎−1
  휎휎
  +�휃휃퐿퐿
  푡푡
  female
  �
  휎휎−1
  휎휎
  �
  휎휎
  휎휎−1
- Variable definitions from source:
  - 푌푌
    푡푡 represents output;
  - 푁푁
    푡푡 is working-age population;
  - 퐿퐿
    푡푡
    male and 퐿퐿
    푡푡
    female are male and female labor force participation rates, respectively;
  - 휎휎 is the elasticity of substitution between female and male inputs;
  - 휃휃 is the ratio of female to male work hours.
- Calibration:
  - Parameters match Ostry and others (2018) with the highest substitutability between female and male labor inputs.
  - Such calibration provides a lower boundary of the potential gains from increasing female labor force participation.

---

### Gains from narrowing the gender gap in education in LIDCs
- Context:
  - Most low-income developing countries (LIDCs) face substantial challenges in human capital development that could inhibit opportunities to benefit from the demographic dividend.
  - Declining fertility and lower dependency ratios are prerequisites for generating the demographic dividend but are insufficient without healthier and better-educated future workers.
  - Education investments take time; LIDCs need gender-responsive human capital policies now to equip today’s youth for future labor force participation.
- Evidence and indicators from figures and text:
  - Figure 5: "Economic Development and Human Capital, 2020" — human capital (health and educational outcomes) tends to be lower in countries with lower GDP per capita. Source: World Bank. Note: Global sample. GDP = gross domestic product; PPP = Purchasing Power Parity.
  - Figure 6: "Share of Population without Education, Select Countries, by Gender and Wealth Quintile" — shows no education (share of population that has not completed primary education) across wealth quintiles for The Gambia, Niger, Nigeria, Senegal, Sierra Leone; disaggregated by gender (Male/Female) and by total 15–49 and wealth quintiles (Lowest, Middle, Highest). Source: Demographic and Health Surveys (latest available).
  - LIDCs often exhibit:
    - Low levels of education attainment.
    - Gender gaps in school enrollment rates.
    - Weak health outcomes for women and girls.
    - High adolescent fertility rates.
  - While enrollment rates for boys and girls have been converging, gender gaps in education attainment persist, particularly for children in households at the lowest income levels (Evans, Akmal, and Jakiela 2020).
  - In Africa, the Middle East, and South Asia, girls are more likely to be disadvantaged in terms of educational access than boys (UNICEF 2022).
- Specific health statistic:
  - In 2021, there were 81.3 births per 1,000 women aged 15–19 years (calculated using the unweighted average of 56 LIDCs; data downloaded from the World Bank and sourced from the United Nations Population Division, World Population Prospects).
- Policy implication:
  - Gender-responsive investments in education and health are necessary now for LIDCs to realize potential gains from demographic change and to ensure future workers can translate lower dependency ratios into economic growth.
- IMF country reports highlighted as analyzing gender in the context of high population growth: The Gambia, Mali, Niger, Nigeria, Senegal, and Sierra Leone.

*Sources: United Nations Population Division; ILO; IMF Staff Calculations; World Bank; Demographic and Health Surveys.*

### 3. Maternal Mortality and Fertility,

### 3. Maternal Mortality and Fertility

### Gender gaps in education and macroeconomic outcomes
- Gender gaps in education have wide-ranging implications for economic growth and development outcomes (Barro 2013; Krueger and Lindahl 2001).
- Inequality in education perpetuates income inequality and curbs progress (Galor and Zeira 1993; Gonzales and others 2015).
- In nations with large educational disparities between girls and boys, limited development of female human capital slows technological uptake and innovation (Barro 2013; Krueger and Lindahl 2001).
- Where there are diminishing marginal returns to education, restricting girls’ education to lower levels while providing higher levels to boys implies that the marginal return on educating girls surpasses that of boys (World Bank 2001; Knowles, Lorgelly, and Owen 2002).
- Increased female educational attainment:
  - promotes greater diversification of output and exports (Kazandjian and others 2019);
  - drives growth of manufacturing exports (Berge and Wood 1994; Dollar and Gatti 1999; Forbes 2000; Appiah and McMahon 2002; Klasen 2002; Gonzales and others 2015).
- Some studies show gender gaps in education have a negative impact on future economic growth, challenging earlier findings that suggested a potential negative relationship between female education and economic growth (Barro and Lee 1994).

### Education, fertility, and demographic transitions
- Educating girls benefits societies broadly and can change gender norms and increase socioeconomic participation.
- In many LIDCs, increased female education contributes to a fall in fertility rates.
- World Bank (2008) finding: one year of female schooling reduces fertility by 10 percent, particularly where secondary schooling is undertaken.
- Women with formal education are more likely to:
  - use reliable family planning methods,
  - delay marriage and childbearing,
  - have fewer and healthier babies than women with no formal education (Karam 2014).
- Higher education for girls helps close the gap between actual and desired fertility by giving women a greater voice, potentially changing population age structure and laying the foundation for a demographic dividend.

### Quantifying gains from equalizing education (model-based evidence)
- A Dynamic General Equilibrium Life-Cycle Model with heterogeneous agents quantifies transmission channels through which gender-responsive policies impact female labor force participation, earnings, economic growth, income inequality and poverty, and public finances (see Annex 2 for details).
- Application to four sub-Saharan African economies shows large benefits from equalizing boys’ and girls’ education:
  - Senegal: ensuring all children receive at least 5 years of education could raise GDP by 8 percent (Malta and others 2019).
  - Nigeria: lifting the level of education of girls in each income quintile to that of boys would boost GDP by 5 percent (Malta and Newiak 2019).
  - Sierra Leone: closing gender gaps in education for each income quintile could increase GDP by 8 percent (Malta, Newiak, and Sandy 2020).
- Niger case study (Ouedraogo and Gomes 2023):
  - On average, girls and boys spend 1.7 and 2.8 years in school, respectively.
  - About 45 percent of girls drop out of primary school.
  - More than three in four women get married by age 18.
  - Equalizing girls’ and boys’ education levels by income percentile triggers:
    - increase in household mean labor income of 8.6 percent;
    - GDP rises by 11.2 percent, owing primarily to the increase in effective hours worked;
    - household consumption rises by 3 percent (+3 percent).
  - Fiscal implications in the Niger analysis:
    - government would need to increase public education spending by 21.2 percent;
    - total government spending would rise by 3 percent;
    - total tax revenue would increase by 11.3 percent, providing more than enough resources to cover new education expenditures;
    - implied reduction in the primary deficit of 9.3 percent.

### Policy solutions: accounting for time and resource constraints
- Fertility decisions are intricately linked to human capital investment and labor market participation, with household choices shaped by preferences for consumption, leisure, number of children, and children’s human capital, subject to time and resource constraints.
- Time categories: paid market work, unpaid home production (household chores, childcare, elderly care), and leisure.
- Gender differences in time use (OECD averages):
  - women allocate 127 minutes more to unpaid work than men;
  - men dedicate 100 minutes more to paid work and 43 minutes more to leisure activities.
- In most countries with available data, women work longer hours when paid and unpaid work are combined (OECD Data).
- Higher fertility rates lead to less time for paid market work for women due to increased unpaid home production.
- Resource constraints: combinations of goods and services available for households for a given level of income; high education costs and barriers to women’s labor market participation may lead parents to have more children but invest less in education per child.
- Higher female education and wages increase a woman’s lifetime opportunity cost of having children, contributing to the negative correlation between female labor force participation rate and fertility rate (the substitution effect).
- Income effect can operate in the opposite direction: higher wages allow employed women to afford substitutes for home production (housekeeping, childcare), potentially supporting a positive correlation between female labor force participation and fertility in advanced economies.
- Policy levers to alleviate time and resource constraints:
  - Correct unequal distributions of care burdens (e.g., infrastructure in LIDCs: electricity, water, sanitation).
  - Encourage greater male involvement in unpaid work (mandatory parental leave, incentives).
  - Marketize home-produced goods and services (child and elderly care) to create paid jobs and reduce time constraints.
  - Subsidize childcare to reduce costs and increase usage, alleviating both time and resource constraints.
  - Subsidized education programs (school feeding) to reduce household resource constraints and time spent on meal preparation, incentivize school attendance, and improve children’s human capital.
  - Move from family to individual taxation to relax resource constraints for women entering the labor market, combined with measures addressing time constraints (e.g., childcare) to avoid restricting fertility choices.

### How policies map to household constraints
- Figure 9 summarizes policy impacts on time and resource constraints (Source: IMF Staff). Specific policy examples described in the text include subsidized childcare, subsidized education programs, marketization of care, parental leave design, and taxation reforms.

### Advanced economies and emerging markets: facilitating work–life choices
- Advanced economies and emerging markets facing declining labor forces should focus on empowering women to balance work–life choices.
- Many advanced economies and emerging markets are on track to see a decline in the working-age population due to below-replacement fertility rates.
- Significant gender gaps in labor force participation: a median of more than 10 percent in advanced economies and almost 21 percent in emerging markets.
- In advanced economies, there is a positive correlation between female labor force participation and fertility (Figure 10), reflecting:
  - marketization of childcare reducing opportunity cost of working;
  - rise in productivity of home production;
  - availability of fertility treatments reducing the risk of unwanted childlessness under delayed fertility (Doepke and others 2023).
- Public childcare:
  - can increase female labor force participation while relaxing constraints to fertility choices (Figure 11.1).
  - Evidence from the United States (1997–2002) showed increase in female wage income due to higher labor force participation by mothers more than compensated for the cost of subsidizing childcare (Council of Economic Advisors 2023).
  - In Japan, public childcare support helped improve female labor force participation and contributed to per capita GDP growth (Xu 2023).
- Marketization of care sector can generate jobs:
  - In the United Kingdom, 83 percent of formal home-care workers and 58 percent of informal carers are female (Banks, French, and McCauley 2023).
  - In Italy, 87 percent of formal caregivers are women, along with 60 percent of informal caregivers (Geyer and others 2023).
  - Simulation results: investing 2 percent of GDP in public-care services would create more jobs than an equivalent investment in construction in the United Kingdom, the United States, Germany, and Australia; investing in care could create almost as many jobs for men and up to four times as many jobs for women (Women’s Budget Group 2016).
- Maternity and parental leave design:
  - Well-designed maternity leave schemes, especially when combined with mandatory paternity leave, can reduce the gender gap in labor force participation.
  - Amin and Islam (2022): legally mandated length of maternity leave positively associated with firm-level female employment, but long periods outside the labor market risk reducing skills and earnings (Ruhm 1998; Edin and Gustavsson 2008).
  - Providing parental leave only to women can encourage employer discrimination (Mandel and Semyonov 2005).
  - Higher participation of men in childcare is associated with higher fertility (Doepke and others 2023).
  - Policies that encourage parity between paternity and maternity leave can support more rapid return to work for mothers and shift gender norms (World Bank 2012).
  - Examples:
    - Sweden: portion of parental leave set aside exclusively for fathers under a “use it or lose it” principle (Duvander, Hass, and Thalberg 2017).
    - Germany: parental leave can be shared, but two months are reserved for each parent and lost if not used (Kraemer 2015); introducing a quota increased fathers taking at least two months of paid leave and positively affected attitudes toward gender equality (Unterhofer and Wrohlich 2017).
  - Supportive frameworks should accompany leave schemes; World Bank (2024) documents gaps between legal and supportive frameworks:
    - Only 16 percent of countries offer incentives to encourage paternity leave.
    - Expectant mothers may face hurdles applying for maternity benefits, indicating a need for streamlined application processes.
    - Incentives in some countries: Portugal offers an additional 30 days of parental leave for parents who take at least 30 days of shared parental leave; Spain exempts maternity and paternity leave benefits from personal income tax (World Bank 2023).
- Policies in OECD countries often support fertility decisions regardless of marital status; proportion of children born outside marriage has increased by at least 25 percentage points since 1970 in most OECD countries (OECD Family Database). Additional financial support (targeted transfers, affordable childcare) can be offered to single-parent households (OECD 2022a).

### Labor market structure, flexibility, and fertility
- Labor market segmentation into protected and unprotected sectors can influence fertility decisions:
  - Protected sector: better job security, higher wages, more comprehensive benefits.
  - Unprotected sector: greater job instability, lower wages, which can discourage family formation and fertility among individuals in the unprotected sector (Guner and others 2024).
  - Policy responses: reduce labor market segmentation, strengthen employment protections, expand access to social benefits, foster labor market flexibility.
- Long work hours and rigid dual labor markets (example: Korea) hurt women’s ability to maintain stable formal jobs and affect fertility outcomes.
- Reducing duality (lowering firing cost) can generate gains, especially if women’s participation in the regular job sector increases; policies promoting flexible work arrangements can help.
- Flexible work arrangements:
  - Help combine labor force and fertility choices by reducing requirement for long, rigid hours (Goldin 2021).
  - Covid-19 increased use of flexible arrangements: in 2019, 60 percent of remote-capable employees worked fully on-site; by 2023 that fell to 20 percent (Wigert, Harter, and Agrawal 2023).
  - Well-designed flexible work, combined with complementary policies (paternity leave, childcare), can boost female labor force participation and lead to a more gender-balanced allocation of unpaid household work.

_Italic: Source: IMF Gender Data Hub and World Bank World Development Indicators; IMF Gender Note (chapter 3)._

### Box 3, offers examples of policies implemented within the private sectors and on a national scale in

### Box 3 — Examples of private‑sector and national policies (Western Balkans and Moldova)

### Fiscal and tax policy instruments to support female labor force participation
- Tax credits or benefits for low‑wage earners can stimulate labor force participation by reducing net tax liability and increasing the net income gain from accepting a job. These credits are mostly provided at a lower level of income and phased out at higher income levels, and may result in a trade‑off between work and childbearing.
- Switching from family income taxation to individual income taxation that reduces the tax burden for (predominantly female) secondary earners can increase female labor force participation. However, this policy may increase the opportunity cost of childbearing and result in fertility declines if not accompanied by other measures such as childcare or tax credits or deductions.
- Progressive taxation can help reduce the overall tax burden on lower‑income households, which are often disproportionately female‑headed households.
- Tax incentives for part‑time work can help balance work and family responsibilities.
- Tax credits or deductions for education and training, particularly in sectors where women are underrepresented, can boost female incentives to join the labor force.
- Integrating a gender lens into tax policy design can help identify and eliminate potential areas of gender discrimination.

### Addressing unpaid care and pension income gaps
- Gender‑responsive policy changes are needed to promote a more equal sharing of the unpaid care burden.
- In OECD countries, women receive, on average, 25 percent less income from pensions. This partly reflects inequalities in the labor market: women have lower employment rates, are more likely to work in part‑time jobs, have shorter careers, and receive overall lower wages, while legal retirement ages also still differ for men and women.
- Policies aimed at reducing labor market barriers for women and promoting a more equal distribution of unpaid work are necessary to expand formal labor market participation.

### Korea case study — Labor market gaps and reform impacts
- Key statistics (2021, among advanced OECD countries):
  - 18‑percentage point gap in labor force participation.
  - 31‑percentage‑point difference in wages.
  - 47 percent of paid female workers are in short‑ and fixed‑term contract jobs, compared to 30 percent of paid male workers.
  - Only 12 percent of managerial positions are held by women.
- Contextual factors:
  - Korea’s working hours are among the longest within OECD advanced countries; the gender gap of working hours is less than the OECD average, implying Korean women face much longer working hours compared to women in peer countries.
  - Entrenched social norms and rigidities in labor market structure (expectation that women shoulder household chores and childcare; emphasis on seniority and long hours) contribute to women leaving the workforce during prime years and returning to less‑secure, lower‑paying nonregular jobs.
- Labor market reform findings:
  - Reducing severance payments for regular contract workers to enhance job market flexibility could lead to fewer people being unemployed, with women benefiting most by joining the workforce.
  - Productivity improved, especially among women, contributing to a reduction in income inequality.
  - Both men and women saw increased participation in both stable and less‑secure job types, with the rise more prominent in less‑secure jobs for women.
  - Implementing policies to support female labor force participation resulted in greater improvements: higher female productivity, a decrease in the proportion of women in less‑secure jobs, and an increase in their presence in stable positions.

*IMF | Gender Note — Box 3 content from gnsea2024002*

### Box 3. Expanding Choices: Gender-Responsive Family Policies for the Private Sector in the

### Box 3. Expanding Choices: Gender-Responsive Family Policies for the Private Sector in the Western Balkans and Moldova

### Project overview
- Implementer: United Nations Population Fund (UNFPA), with funding from the Austrian Development Cooperation (ADC).
- Project name and period: “Expanding Choices” (December 2019–November 2023).
- Coverage: Albania, Kosovo, and Moldova.
- Objectives:
  - Help employees balance work and life.
  - Equally distribute unpaid care work between men and women.
  - Increase women’s participation in the labor force.

### Private sector engagement and workplace initiatives
- Engagement outcome:
  - 19 “Champion Companies” initiated family-friendly initiatives.
- Types of workplace initiatives implemented:
  - Establishing breastfeeding rooms.
  - Establishing family-friendly rooms.
  - Creating children’s playgrounds at work.
  - Providing extended paternity and parental leave and carer leave.
  - Increasing financial support for employees.
  - Keeping colleagues on parental leave informed.
  - Providing flexible work arrangements.
- Reach and beneficiaries:
  - These initiatives have benefited over 13,600 employees and their families.

### National policy impact (Moldova example)
- Legislative changes adopted in Moldova in July 2022:
  - Childcare leave can now be shared between fathers and mothers.
  - The period for requesting paternity leave has been extended.
  - The child-raising allowance has been changed.
  - The flexible work schedule is now regulated in the Labor Code.

### Advocacy, knowledge sharing, and cultural shifts
- Tools and partnerships:
  - UNFPA and Parent Smart Employer (Sweden) developed a model to support companies’ family-friendly workplace initiatives.
- Knowledge exchange activities:
  - Study visits and conferences facilitated knowledge exchange and influenced private sector mindset.
- Outreach and awareness:
  - Awareness campaigns promoting work–life balance and family-friendly workplaces reached over 4.5 million individuals online.
- Cultural milestone:
  - Albania celebrated its first Fathers’ Day as part of these efforts, signaling a cultural shift toward recognizing diverse caregiving roles.

### Policy implications and recommendations highlighted by the project
- Promote gender-responsive family policies in both private sector and national legislation to:
  - Reduce work–life trade-offs for employees.
  - Increase women’s labor force participation by addressing unpaid care burdens.
  - Encourage more equal sharing of caregiving responsibilities between men and women.
- Combine workplace initiatives with legislative reform to amplify impact (example: Moldova’s July 2022 changes).
- Use public advocacy, knowledge transfer, and private–public partnerships to shift social norms and private sector practices.

### Key statistics and figures from the box
- Project period: December 2019–November 2023.
- Number of “Champion Companies”: 19.
- Number of employees and families benefited: over 13,600.
- Online reach of awareness campaigns: over 4.5 million individuals.
- Date of legislative changes in Moldova: July 2022.

*IMF | Gender Note — Box 3. Expanding Choices: Gender-Responsive Family Policies for the Private Sector in the Western Balkans and Moldova*

### Annex 1. Population Dynamics

### Annex 1. Population Dynamics

### Population Estimates and Projections, 1950–2100
- Figure title: Population Estimates and Projections, 1950–2100
- Sources: United Nations Population Division and IMF Staff Estimates.
- Note: AEs = advanced economies; AFR = sub-Saharan Africa; APD = Asia and the Pacific; EMs = emerging markets; EUR = Europe; LIDCs = low-income and developing countries; MCD = Middle East, North Africa, and Central Asia; WHD = Western Hemisphere.

### Framework to Assess the Macroeconomic Gains from Education
- Model purpose:
  - Country-specific model to assess macroeconomic gains from education and related gender dynamics (as described in IMF (2024); see Malta and others [2019] or Fruttero and others [2020] for more details).
- Heterogeneity captured:
  - Individuals differ by gender, stage of life, labor skills, and access to savings.
  - Model examines gender biases in both the workplace and the household that create barriers to female labor force participation.
  - Distinguishes formal and informal jobs; captures disproportionate female representation in the informal sector, especially relevant for LIDCs.
- Household and labor decisions:
  - Households modeled as a man and a woman making consumption decisions each life period.
  - Consumption goods and services are produced in formal and informal sectors.
  - Men choose hours worked in formal or informal sectors.
  - Women first decide whether to participate in the labor market; conditional on participation, they choose hours in formal or informal sectors.
  - Households incur a utility cost when women participate in the labor market stemming from coordinating home production, child or elderly care, unpaid work, and complying with laws and social norms that create barriers for women to work outside the household.
- Human capital and skills:
  - Initial skills and years of education determine human capital, which evolves endogenously through on-the-job experience.
- Production and discrimination:
  - Formal sector production uses capital and labor inputs.
  - Informal sector production uses only labor.
  - Women face wage discrimination.
- Fiscal structure:
  - Households pay taxes on formal sector goods and services, purchases, and earned income.
  - Corporate revenues in the formal sector are taxed.
  - Government spends revenues on public consumption, public education, and transfers.

*Source: gnsea2024002 - Annex 1. Population Dynamics (IMF PDF).*

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_Source: https://www.imf.org/-/media/files/publications/gns/2024/english/gnsea2024002.pdf_