## wpiea2024171-print-pdf - Executive Summary ## Source details **Canonical URL:** [wpiea2024171-print-pdf - Executive Summary](https://www.imf.org/-/media/files/publications/wp/2024/english/wpiea2024171-print-pdf.pdf) ## Other formats - [Markdown version](/-/media/files/publications/wp/2024/english/wpiea2024171-print-pdf.pdf.md) - [Structured JSON version](/-/media/files/publications/wp/2024/english/wpiea2024171-print-pdf.pdf.json) --- ### Introduction - Labor market gender gaps are macro-critical for Türkiye; closing the LFP gender gap would significantly increase the size of the labor force and support growth. - The paper: - Places Türkiye’s labor market gender disparities in an international context. - Documents stylized facts about Türkiye’s LFP gender gap. - Reviews interlinkages between fiscal policy and labor market gender gaps. - Identifies policy and research priorities. ### Türkiye’s Labor Market Gender Gaps in an International Context — Key Findings - Female labor force participation (LFP) in Türkiye is around 37 percent. - Türkiye’s LFP gender gap (male minus female LFP) is among the largest in the G20 and much bigger than in many emerging markets. - The share of women in informal relative to formal employment is higher in Türkiye than in many emerging markets. - Türkiye’s female unemployment rate and the gender gap in unemployment do not stand out internationally. - Türkiye’s gender pay gap in the formal sector is large, but not particularly more so than in other countries or peer groups (after controlling for compositional effects); the informal sector may differ. ### Stylized Facts on the Labor Force Participation Gender Gap - The LFP gender gap is driven by less skilled workers; the gap narrows significantly at higher education levels. For low- and medium-skilled workers Türkiye’s gap is among the highest in the G20. - The gap widens significantly among 25–34-year-olds, with a sharp rise of about 20 percentage points compared to the younger cohort. - The gap is larger among married individuals and mothers: - The gap doubles in size for married relative to single individuals. - LFP of mothers with young children is lower than for mothers without young children; the same is not true for fathers. - The LFP gender gap is higher in urban areas, but large across all regions. ### Fiscal Policy and Labor Market Gender Gaps in Türkiye Overview: - Fiscal policy affects gender outcomes through tax policy, expenditure policy (social protection, childcare, education), and gender budgeting. Tax policy: - Türkiye did not have a personal income tax (PIT) exemption threshold until 2022; this likely increased the marginal tax rate from entering formal employment and could have weighed on female LFP. - Individual income taxation has been in place since 1998 (favorable from a gender equality perspective versus household-level taxation). - Tax credits for child- and elderly-care expenses could support female labor supply by offsetting lost tax savings when women pay for care services. Expenditure policy — Social protection and care: - Parental leave provisions in Türkiye are largely comparable to other OECD countries in length and average payment rates, but provisions are skewed towards mothers; making parental leave more gender-neutral could improve outcomes. - Publicly financed paid maternity leave can help increase female LFP, particularly among low-skilled women and in contexts of low informality and more evenly shared parental leave. - Childcare supply and affordability are constraints: - Only around 15 percent of children in the bottom income decile attend pre-school or center-based childcare, compared to 60 percent of children in the top income decile (World Bank, 2015). - Childcare services are predominantly public in Türkiye, but fiscal spending on childcare and pre-primary education is low compared to the OECD and some emerging and low-income countries. - A well-targeted increase in public spending on childcare and pre-primary education could support female LFP by reducing fixed entry costs to employment. - Providing cash transfers to low-income women participating in the labor market typically increases female LFP and could be introduced following a holistic assessment. Expenditure policy — Education: - Education gender gaps (enrollment rates and years of education) in Türkiye are comparable to peers and do not appear to be binding constraints. Gender budgeting (GB) and Gender Impact Assessments (GIA): - GB applies a gender perspective to fiscal policy and budget processes to fund gender-equality initiatives and inform policy decisions of gender impacts. - Progress and gaps: - The Turkish Grand National Assembly has championed gender mainstreaming and conducted hearings on gender-related issues and budget/tax impacts. - Gender-related performance indicators are incorporated into some official development plans. - Authorities have worked with UN-Women to enhance GB policies. - Türkiye lacks a legislative framework for gender budgeting and has no single coordinating department for gender discussions during the budget process. - Recommended institutional steps: - Establish legal and institutional provisions for GB to ensure policy continuity and better integration of gender priorities into resource allocation. - Implement systematic ex-ante GIAs for all new policy initiatives and major budget programs. - Conduct in-depth ex-post GIAs for selected existing policies; candidate policies include: - Women qualify for severance pay within a year of getting married; - Women who have children can retire earlier; - Women whose deceased husband or fathers were entitled to retirement benefits can claim a share of these benefits if they are single and not working. - Integrate gender objectives and instructions explicitly into the budget preparation process and budget circulars. ### Key Messages and Policy Priorities Macroeconomic importance: - Türkiye’s gender gaps in LFP and informality lower Türkiye’s potential GDP by about 25 percent; closing these gaps would boost medium-term growth and make it more inclusive. Priority fiscal policies (enumerated): 1. Increasing the supply of affordable and well-targeted public childcare services through a targeted increase in public spending on childcare and pre-primary education following a cost-benefit assessment. 2. Supporting childcare services usage by low-income workers through targeted subsidies, tax allowances (or tax credits), and/or conditional cash transfers. 3. Policies to reduce informality. 4. Further enhancing Türkiye’s gender-budgeting framework, starting with an institutional framework where one department (or a committee) coordinates gender discussions during the budget process. 5. Gender impact assessments of certain existing policies. ### Future Analytical Work (Research Priorities) - A holistic assessment of the optimal combination of fiscal policy options (i.e.: public spending on childcare, conditional cash transfers, subsidies, and tax credits or allowances) that maximizes the impact on Türkiye’s LFP gender gap. - Assessing the impact of policy options to reduce informality in Türkiye’s labor market (e.g.: reducing employment costs and the rigidity of employment rules) on gender gaps. - Assessing the implications of existing PIT brackets and exemption threshold on female labor force participation, taking into account Türkiye’s large informal sector, women’s income distribution, and the current high inflation environment. - A cost-benefit analysis of making parental leave policies more gender-neutral. *Source: wpiea2024171-print-pdf - Executive Summary (IMF Working Papers).* ### Executive Summary ...................................................................................................... ### wpiea2024171-print-pdf - Executive Summary ### Executive Summary - Listed on page 4. ### A. Introduction - Section A listed on page 5. ### B. Türkiye’s Labor Market Gender Gaps in an International Context - Section B listed on page 5. ### C. Labor Force Participation Gender Gap – Stylized Facts - Section C listed on page 7. ### D. Fiscal Policy and Labor Market Gender Gaps in Türkiye - Section D listed on page 9. ### E. Key Messages and Policy Priorities - Section E listed on page 14. ### References - Listed following section E; References page number not specified in supplied content (References header present). ### Figures and Boxes - FIGURES section present. - Box 1. Türkiye’s Pay Gender Gap in an International Context (listed on page 17). ### Glossary - LFP – labor force participation - GDP – gross domestic product - G20 – Group of 20 - PIT – personal income tax - OECD – Organization for Economic Co-operation and Development - GB – gender budgeting - GIA – gender impact assessment *Source: wpiea2024171-print-pdf - Executive Summary (IMF Working Papers).* ### Executive Summary ### Executive Summary ### Introduction - Labor market gender gaps are macro-critical for Türkiye; closing the LFP gender gap would significantly increase the size of the labor force and support growth. - IMF research has shown that closing all of Türkiye’s economic gender gaps could have large GDP gains (IMF 2017). - This paper: (i) places Türkiye’s labor market gender disparities in an international context; (ii) documents stylized facts about Türkiye’s LFP gender gap; (iii) reviews interlinkages between fiscal policy and labor market gender gaps; and (iv) identifies policy and research priorities. ### Türkiye’s Labor Market Gender Gaps in an International Context Findings: - Female labor force participation (LFP) in Türkiye is around 37 percent. - Türkiye’s LFP gender gap (male minus female LFP) is among the largest in the G20 and much bigger than in many emerging markets. - The share of women in informal relative to formal employment is higher in Türkiye than in many emerging markets. - Türkiye’s female unemployment rate and the gender gap in unemployment do not stand out internationally. - Türkiye’s gender pay gap in the formal sector is large, but not particularly more so than in other countries or peer groups (after controlling for compositional effects); the informal sector may differ. ### Stylized Facts on the Labor Force Participation Gender Gap Key stylized facts: - The LFP gender gap is driven by less skilled workers; the gap narrows significantly at higher education levels. For low- and medium-skilled workers Türkiye’s gap is among the highest in the G20. - The gap widens significantly among 25–34-year-olds, with a sharp rise of about 20 percentage points compared to the younger cohort. - The gap is larger among married individuals and mothers: - The gap doubles in size for married relative to single individuals. - LFP of mothers with young children is lower than for mothers without young children; the same is not true for fathers. - The LFP gender gap is higher in urban areas, but large across all regions. ### Fiscal Policy and Labor Market Gender Gaps in Türkiye Overview: - Fiscal policy can affect gender outcomes through tax policy, expenditure policy (social protection, childcare, education), and gender budgeting. Tax policy: - Türkiye did not have a personal income tax (PIT) exemption threshold until 2022; this likely increased the marginal tax rate from entering formal employment and could have weighed on female LFP. - Individual income taxation has been in place since 1998 (favorable from a gender equality perspective versus household-level taxation). - Tax credits for child- and elderly-care expenses could support female labor supply by offsetting lost tax savings when women pay for care services. Expenditure policy — Social protection and care: - Parental leave provisions in Türkiye are largely comparable to other OECD countries in length and average payment rates, but provisions are skewed towards mothers; making parental leave more gender-neutral could improve outcomes. - Publicly financed paid maternity leave can help increase female LFP, particularly among low-skilled women and in contexts of low informality and more evenly shared parental leave. - Childcare supply and affordability are constraints: - Only around 15 percent of children in the bottom income decile attend pre-school or center-based childcare, compared to 60 percent of children in the top income decile (World Bank, 2015). - Childcare services are predominantly public in Türkiye, but fiscal spending on childcare and pre-primary education is low compared to the OECD and some emerging and low-income countries. - A well-targeted increase in public spending on childcare and pre-primary education could support female LFP by reducing fixed entry costs to employment. - Providing cash transfers to low-income women participating in the labor market typically increases female LFP and could be introduced following a holistic assessment. Expenditure policy — Education: - Education gender gaps (enrollment rates and years of education) in Türkiye are comparable to peers and do not appear to be binding constraints. Gender budgeting (GB): - GB applies a gender perspective to fiscal policy and budget processes to fund gender-equality initiatives and inform policy decisions of gender impacts. - Türkiye has taken important steps to develop its GB framework: - The Turkish Grand National Assembly has championed gender mainstreaming and conducted hearings on gender-related issues and budget/tax impacts. - Gender-related performance indicators are incorporated into some official development plans. - Authorities have worked with UN-Women to enhance GB policies. - Gaps and priorities: - Türkiye lacks a legislative framework for gender budgeting and has no single coordinating department for gender discussions during the budget process. - Establishing legal and institutional provisions for GB is a priority to ensure policy continuity and better integration of gender priorities into resource allocation. - Implementing systematic ex-ante Gender Impact Assessments (GIAs) for all new policy initiatives and major budget programs, plus in-depth ex-post GIAs for selected existing policies, is recommended. Candidate existing policies for ex-post GIA include: - Women qualify for severance pay within a year of getting married; - Women who have children can retire earlier; - Women whose deceased husband or fathers were entitled to retirement benefits can claim a share of these benefits if they are single and not working. - The budget preparation process should explicitly integrate gender objectives and instructions into budget circulars. ### Key Messages and Policy Priorities Macroeconomic importance: - Türkiye’s gender gaps in LFP and informality lower Türkiye’s potential GDP by about 25 percent; closing these gaps would boost medium-term growth and make it more inclusive. Priority fiscal policies: 1. Increasing the supply of affordable and well-targeted public childcare services through a targeted increase in public spending on childcare and pre-primary education following a cost-benefit assessment. 2. Supporting childcare services usage by low-income workers through targeted subsidies, tax allowances (or tax credits), and/or conditional cash transfers. 3. Policies to reduce informality. 4. Further enhancing Türkiye’s gender-budgeting framework, starting with an institutional framework where one department (or a committee) coordinates gender discussions during the budget process. 5. Gender impact assessments of certain existing policies. ### Future Analytical Work (Research Priorities) - A holistic assessment of the optimal combination of fiscal policy options (i.e.: public spending on childcare, conditional cash transfers, subsidies, and tax credits or allowances) that maximizes the impact on Türkiye’s LFP gender gap. - Assessing the impact of policy options to reduce informality in Türkiye’s labor market (e.g.: reducing employment costs and the rigidity of employment rules) on gender gaps. - Assessing the implications of existing PIT brackets and exemption threshold on female labor force participation, taking into account Türkiye’s large informal sector, women’s income distribution, and the current high inflation environment. - A cost-benefit analysis of making parental leave policies more gender-neutral. *Source: wpiea2024171-print-pdf - Executive Summary* ### References ### References ### Bibliographic entries - Central Bank of the Republic of Türkiye (CBRT), 2021, “Declining Labor Market Informality in Turkey: Unregistered Employment and Wage Underreporting”. - Cuberes, D. and Teignier, M., 2016, “Aggregate Effects of Gender Gaps in the Labor Market: A Quantitative Estimate.” Journal of Human Capital 10 (1): 1–32. - International Monetary Fund (IMF), 2017, “Women, Work, and Economic Growth – leveling the Playing Field” (Washington, International Monetary Fund). - _________, 2020, “Women in the Labor Force: The Role of Fiscal Policies” (Washington, International Monetary Fund). - _________, 2021, “Gender Budgeting in G20 Countries” (Washington, International Monetary Fund). - _________, 2022, “Gendered Taxes: The Interaction of Tax Policy with Gender Equality” (Washington, International Monetary Fund). - World Bank, 2015, “Supply and Demand for Child Care Services in Turkey” (Washington, World Bank Group). ### Box 1. Türkiye’s Pay Gender Gap in an International Context — key findings and chart notes - Statement: “Türkiye’s gender pay gap by monthly earnings is large, but it does not stand out internationally. In fact, the gender gap for hourly pay is small 1/” - Statement: “After controlling for compositional factors, the gender gap for hourly pay increases, but it remains smaller than elsewhere.” - Sources: ILOSTAT (Global Wage Report 2018/19) and IMF staff calculations. - Footnote 1/: “Presumably, these data suggest that Türkiye’s monthly earnings gender gap is driven by women working disproportionately fewer hours, but data issues complicate the cross-country comparison of hours worked.” - Footnote 2/: “A factor-weighted gender pay gap is computed by clustering women and men in comparable subgroups (based on “education”, “age”, “full-time versus part-time” and “private-sector versus public-sector employment”), estimating subgroup-specific gender pay gaps, and weighing these subgroups by their share in the population of wage employees.” - Chart axis labels and categories (as presented): - Mean Gender Pay Gap by Monthly Earnings (Difference in mean monthly earnings between men and women as a % of the level for men) — tick marks shown: 0, 10, 20, 30 - Median Gender Pay Gap by Monthly Earnings (Difference in median monthly earnings between men and women as a % of the level for men) — tick marks shown: 0, 10, 20, 30, 40 - Mean Gender Pay Gap by Hourly Earnings (Difference in average hourly earnings between men and women as a % of the level for men) — tick marks shown: -5, 0, 5, 10, 15, 20 - Median Gender Pay Gap by Hourly Earnings (Difference in median hourly earnings between men and women as a % of the level for men) — tick marks shown: 0, 10, 20, 30 - Factor Weighted Mean Gender Pay Gap by Hourly Earnings 2/ (Difference in average hourly earnings between men and women as a % of the level for men) — tick marks shown: 0, 10, 20, 30 - Factor Weighted Median Gender Pay Gap by Hourly Earnings 2/ (Difference in median hourly earnings between men and women as a % of the level for men) — tick marks shown: 0, 10, 20, 30 - Comparison groups shown in charts: Türkiye, World, Low-income, Upper-middle income, Low-middle income, High income *Labor Market Gender Gaps in Türkiye: A Bird’s Eye View — Working Paper No. WP/24/171* --- _Source: https://www.imf.org/-/media/files/publications/wp/2024/english/wpiea2024171-print-pdf.pdf_