## 1. Extensive Margin: Europe—Women

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### I. Introduction and high-level findings
- Female labor force participation rates more than doubled in countries such as the Netherlands, Spain, and Ireland over the past three decades, substantially lifting the EU average.
- The share of women working in EU countries is now among the highest in the world, trailing closely behind North America and East Asia.
- Gender participation gaps narrowed in most European countries but remain substantial; the rate at which gaps close has slowed significantly during the past decade.
- Cross-country heterogeneity:
  - More than 90 percent of women aged 25–54 in Sweden work.
  - Around 65 percent in Italy and Malta work.
  - In some high-participation countries (Germany and the Netherlands), incidence of part-time work among women is substantial.
- Main empirical contributions:
  - Focus on European economies in the post-2000 period using micro-level ISSP data (2002 and 2012).
  - Distinguish extensive (whether a woman is working) and intensive (how many hours) margins.
  - Use individual-level controls and country-level policy variables with country and time fixed effects.

### II. Data, sample, and empirical strategy
- Primary microdata: 2002 and 2012 rounds of the ‘Family and Changing Gender Roles’ module of the ISSP, combined with country-level policy and macro controls.
- Sample: 24 European economies from the ISSP (Appendix B reports country coverage).
- Key individual variables:
  - Employed: 1 if hours worked > 0 and hours or incidence of work reported; 0 otherwise.
  - Hours worked: weekly hours (responses such as ‘time varies’ or ‘don’t know’ set to missing).
  - Number of children: number living in household.
  - Education: years of schooling.
  - Age; Married; Mother working; Attitude (principal component).
- Country-level variables: relative marginal tax rates on second earners, part-time incentives, public expenditures on childcare (percent of GDP), family allowance (percent of GDP), parental leave (weeks), output gap, male employment rate.
- Estimation:
  - Extensive margin: linear probability model (indicator = 1 if employed); probit robustness.
  - Intensive margin: Tobit for hours; full-time vs part-time (>= 30 hours).
  - Standard errors: heteroskedasticity-adjusted, clustered at country-year.
- Limitations: causality challenges, policy endogeneity, potential endogeneity of attitudes.

### III. Stylized context and structural trends (selected quantitative facts)
- Average EU female labor force participation rate among 25–54 year-olds in 2014: almost 80 percent.
- Cross-country (25–54, 2014): close to 90 percent in Lithuania, Slovenia, and Sweden; 66 percent in Italy; 63 percent in Malta.
- Average increase in participation rates in the 2000s: less than 6 percentage points (versus 12 percentage points in the 1980s and close to 7 percentage points in the 1990s; based on a simple average of eight countries).
- Gender participation gap for the EU as a whole: 12 percentage points; Sweden: 5 percentage points; Malta: 32 percentage points.
- Part-time and hours facts:
  - In the Netherlands more than 80 percent of women are involved in market work and more than half of prime working-aged women are employed part-time.
  - Employed men in Germany work nearly 40 hours per week; women around 30 hours per week.
  - In Bulgaria employed men and women work approximately equally at around 40 hours per week.
  - Gender gaps in hours worked are narrow (<5 percent) in the Czech Republic, Romania, and Slovakia.
- Structural trends since early 1980s:
  - Average number of children (under 14) per woman fell from approximately 0.7 in the early 1980s to 0.5 in 2012.
  - Female education gap with men shrunk from more than one year in 1980 to less than four months in 2012–13.
  - Women in parliamentary positions rose to 28 percent in 2014, up from 18 percent in 1997.
  - Share of employment in services rose from around 50 percent of GDP in 1980 to around 65 percent of GDP in 2013.
  - Gender wage gaps: recent range cited more than 30 percent in Estonia to about 6.5 percent in Luxembourg (OECD Employment Database 2014).

### IV. Empirical results — Extensive margin (key coefficients and magnitudes)
- Structural characteristics:
  - Each additional child in the household associated with a 6 percentage point lower likelihood of female employment ("Each additional child living in the household is associated with a 6 percentage point lower likelihood of female employment.").
  - Education positively related to employment: additional year of schooling associated with higher employment probability (example coefficient: 0.0526*** in column (1)).
  - Life-cycle pattern: employment rates increase with age, peaking around 45 years, and falling thereafter.
  - Married women are not less likely to be employed on average, conditional on observables.
  - Intergenerational transmission: daughters of employed mothers more likely to be employed (example mother working coefficient: 0.0385***).
  - Attitudes: more egalitarian gender attitudes significantly increase likelihood to work; attitudes account for close to one-fifth of explanatory power.
- Policy associations (extensive margin):
  - Relative tax rates on secondary earners negatively associated with female employment:
    - Example: moving from the 25th percentile to the 75th percentile of the reduction in the tax ratio during 2002–12 would imply a 5 percentage point higher female employment rate (all else equal), given the estimated effect.
    - Reported tax-on-second-earner coefficients across specifications include: -0.4615***, -0.5330***, -0.3934*, -0.4263**, -0.7531***, -0.6557***.
  - Part-time incentives positively associated with employment (example coefficient: 0.1868***).
  - Childcare spending positively related to employment with coefficients reported as 0.1160*, 0.1168**, 0.1025***.
    - Example magnitude: moving from the 25th percentile to the 75th percentile of the increase in childcare during 2002–12 would imply a 2.5 percentage point higher female employment rate (all else equal).
  - Family allowance spending tends to be negatively correlated with employment (example coefficients: -0.1051**, -0.1048***).
  - Parental leave exhibits an inverted U-shaped relationship:
    - Parental leave coefficients reported: 0.1548***, 0.2079***; squared term negative and significant (e.g., -0.0004***, -0.0007***).
    - Estimated peak suggests parental leave beyond around 140 weeks could discourage employment at the extensive margin (based on coefficient estimates).
- Decomposition of 2002–12 changes:
  - Predicted change in female employment closely matches actual change for countries with both years.
  - Drivers of the rise: higher educational attainment; reduction in number of kids; more gender-egalitarian attitudes.
  - Policy contributions: increases in public spending on childcare, reductions in relative tax on the second earner, and reduced family allowance contributed to raising female employment.
  - A few countries lowered parental leave weeks between 2002 and 2012, contributing negatively.
  - Macro controls including the output gap contributed negatively to female employment during the period.

### V. Comparative results — Women versus men; Advanced versus emerging Europe
- Women versus men:
  - Policies examined are more strongly associated with employment of women than men.
  - Example: tax on the second earner coefficients — women: -0.7531***; men: -0.2192*** (much smaller magnitude for men).
  - Childcare spending appears irrelevant for male labor force participation (women: 0.1168**, 0.1025***; men: -0.0159, -0.0221).
  - Implication: policy changes could help narrow the gender employment gap.
- Advanced vs emerging Europe:
  - Relative tax on the second earner is negative and significant in advanced Europe; effects in emerging Europe less consistent.
  - Interaction results: childcare provision interacted with emerging Europe indicator positive and highly significant (example coefficients: 0.5175***, 0.5014***), suggesting childcare support’s importance is mainly driven by emerging market countries.
  - Parental leave appears a stronger determinant of women’s employment rates in advanced countries.

### VI. Empirical results — Intensive margin (hours and full-time participation)
- Definitions:
  - Full-time vs part-time: full-time defined as at least 30 hours per week (indicator = 1 for full-time).
  - Hours worked examined for employed women and for all women (to include extensive margin).
- Structural characteristics:
  - For employed women, education is not a significant determinant of hours at the intensive margin.
  - Married working women tend to be employed at less than full time (marriage coefficients negative for full-time vs part-time).
- Policy associations (intensive margin):
  - Higher relative tax on the second earner associated with both lower probability of employment and fewer hours worked.
    - Example tax-on-second-earner coefficients in hours regressions: -6.0473***, -23.5055***.
  - Childcare provision appears important primarily at the extensive margin; effects on hours mixed:
    - Example childcare spending coefficient for all women hours: 3.0667* in one specification; negative for employed-only sample in other specifications.
  - Parental leave:
    - Positive association with employment at the extensive margin.
    - Longer parental leave associated with shorter work weeks for employed women (example coefficients: -0.1338*** for full-time vs part-time; -4.9310*** for hours worked of employed women).
    - Interpretation caveat: distribution of leave over several years may influence interpretation (e.g., taking one or two days per week).

### VII. Robustness checks
- Probit estimation for the extensive margin yields similar main results.
- Sample restricted to women with children: policy effects are larger and more precisely estimated.
- Balanced-country sample (countries present in both 2002 and 2012): main results unaffected.
- Alternative tax measures and exclusion of high-tax outliers: higher relative tax on the second earner remains associated with lower female employment.
- Tobit estimation for hours (all women) supports main findings.
- Overall qualitative conclusions hold across alternative specifications, samples, and estimation methods.

### VIII. Policy conclusions and recommendations
- Summary: Individual demographics, gender-role attitudes, and policies jointly determine women’s labor market decisions on both extensive and intensive margins.
- Policy implications:
  - Tax policy:
    - Design should reduce disincentives for the second earner, particularly in advanced countries (relative taxation on the second earner is negatively associated with female employment and hours).
  - Public spending composition:
    - Lump-sum cash family allowance transfers appear to deter women from working (negative association with employment).
    - Higher public spending on early childhood education and childcare is associated with higher female employment, especially in emerging European countries.
  - Parental leave:
    - Parental leave shows positive effects up to a point (inverted U); very long parental leave (beyond around 140 weeks per estimates) may discourage labor market entry on the extensive margin and reduce hours for employed women.
- Intensive margin considerations:
  - Fiscal disincentives from relative taxation of the second earner influence both the extensive and intensive margins.
  - Childcare provision and family allowance mainly affect the extensive margin.

*Source: _wp1649 - 1. Extensive Margin: Europe—Women (excerpts and results from the provided IMF PDF content).*

### 1. Extensive Margin: Europe—Women ...................................................................................21

### 1. Extensive Margin: Europe—Women

### Contents covered in this unit
- Title as listed: "1. Extensive Margin: Europe—Women"
- Located on page "21" in the source PDF.

### Related document structure (items that reference or contextualize this unit)
- Other main section titles in the document (as listed in the source):
  - "2. Extensive Margin: Europe—Women versus Men" .......................................................................26
  - "3. Extensive Margin: Advanced and Emerging Europe—Women" ..........................................28
  - "4. Intensive Margin: Europe—Women" ....................................................................................29
  - "5. Robustness: Europe—Women" .............................................................................................31
- Figures in the overall document (figure numbers and titles as listed):
  - "1. Female Labor Force Participation Across the Globe" .............................................................6
  - "2. Female Labor Force Participation in Europe" .......................................................................12
  - "3. Selected Countries: Labor Force Participation by Age and Education, 2014" ......................14
  - "4. Part-Time Employment of Women" ......................................................................................15
  - "5. Determinants of Labor Supply: Structural Factors" ..............................................................16
  - "6. Determinants of Labor Supply: Policies" ..............................................................................17
  - "7. Decomposing the Change in the Female Employment Rate, 2002–12" ...............................24

### Appendices and supporting material referenced in the document
- Appendices (as listed):
  - "A. Data" .....................................................................................................................................38
  - "B. Country Coverage" ...............................................................................................................44
- Appendix Tables (as listed):
  - "A1. Summary Statistics: Individual Attributes" ........................................................................39
  - "A2. Pairwise Correlation Coefficients: Individual Characteristics" ..........................................39
  - "A3. Summary Statistics: Policies" .............................................................................................43
  - "A4. Pairwise Correlation Coefficients: Policies" ......................................................................43
  - "B1. Country Coverage" .............................................................................................................44
- Appendix Figure:
  - "A1. ISSP Statistics" ...................................................................................................................40

*Source: _wp1649 - 1. Extensive Margin: Europe—Women (page 21) from the provided IMF PDF content.*

### References .............................................................................................................

### References

### I. Introduction — summary of key findings
- Over the past three decades, female labor force participation rates have more than doubled in countries such as the Netherlands, Spain, and Ireland, substantially lifting the European Union (EU) average.
- The share of women working in EU countries is now among the highest in the world, trailing closely behind North America and East Asia and ranking far above countries in the Middle East, Latin America, and South Asia.
- Gender gaps in participation have narrowed in most European countries but remain substantial; the rate at which gender participation gaps are closing has slowed significantly during the past decade.
- Cross-country heterogeneity:
  - More than 90 percent of women aged 25–54 in Sweden work.
  - Around 65 percent in Italy and Malta work.
  - In some high-participation countries (Germany and the Netherlands), incidence of part-time work among women is substantial, creating a larger gender gap in labor supply than participation rates indicate.
- Key research questions motivating the paper:
  - To what extent does the female employment decision reflect individual preferences?
  - Can removal of policy distortions and the provision of services that help reconcile work and family life further boost female labor participation in Europe?
- Data and approach:
  - Micro-level data from two rounds of the International Social Survey Programme (ISSP) across 24 European countries.
  - Analysis of both extensive (whether a woman is working) and intensive (how many hours women work) margins.
- Main contributions:
  - Focus on European economies in the post-2000 period.
  - Use of individual-level data to disentangle personal (or household) choice and macro-level policy effects.
  - Exploration of both extensive and intensive margins of female employment.
- High-level empirical findings:
  - Women’s self-reported attitudes towards the desirability of female market work are key predictors of women’s decision to join the labor force.
  - On the extensive margin, greater labor tax distortions are significantly correlated with a lower probability of a prime-aged woman working; provision of childcare tends to support women’s entry into the workforce.
  - Tax distortions tend to be more important among advanced European countries than among emerging European countries.
  - On the intensive margin, women tend to work fewer hours where there are greater tax disincentives on the second earner or greater availability of parental leave.

*I. INTRODUCTION — pages 5–7 of the source document.*

### II. Drivers of female employment — literature synthesis and mechanisms
- Theoretical framework:
  - Becker’s time allocation model (Becker, 1965): women choose between household work and market work; both individual characteristics and policies affect female labor supply.
  - Demand-side factors (e.g., expansion of the services sector) can raise returns to female market work (Ngai and Petrongolo, 2014).
- Structural characteristics (summary of empirical evidence):
  - Demographics:
    - Marital status and number of dependents raise the value of home production and have been correlated with lower participation rates.
    - Age is an important determinant of labor supply (Heckman and MaCurdy, 1980; Bloom, 2009; Mishra and Smyth, 2010; Eckstein and Lifshitz, 2011; Fernández and Wong, 2014).
  - Education:
    - Higher education raises potential earnings and is associated with higher female employment rates (Eckstein and Lifshitz, 2011; Pissarides and others, 2005).
  - Social norms and attitudes:
    - Non-traditional gender attitudes are associated with better employment outcomes and more egalitarian household divisions (Corrigall and Konrad, 2007; McGinn and others, 2015).
    - Exposure to women in the labor force or leadership can weaken stereotypes, boosting participation (Beaman and others, 2009; De Paola and others, 2010; Bonomi and others, 2013).
  - Structure of the economy:
    - Expansion of services sector positively associated with female employment (Das and others, 2015; Thévenon, 2013).
  - Wage gap:
    - A higher hourly wage for men than women may discourage women from entering the labor market; however, establishing a robust negative cross-country relationship is difficult due to confounding factors (Kinoshita and Guo, 2015; Keane, 2011; Dao and others, 2015; Steinberg and Nakane, 2012).
- Policy channels (two main channels identified):
  - Taxation and labor market regulations that affect relative returns to market vs. home production.
  - Policies that help reconcile market and domestic responsibilities (part-time opportunities, parental leave, child- and elderly-care provision).
- Policy-specific evidence:
  - Taxation:
    - Women’s labor supply is sensitive to taxation (Keane, 2011).
    - More neutral tax treatment of first- and second-wage earners is associated with higher female labor force participation (Bick and Fuchs-Schündeln, 2014; Dao and others, 2014).
  - Part-time work:
    - Part-time options can facilitate market integration but can be involuntary and reflect policy constraints (Kenjoh, 2005; Steinberg and Nakane, 2012; OECD, 2004).
  - Child benefits and transfers:
    - Lump-sum child benefits and tax allowances generate income effects that could discourage participation, but empirical evidence is inconclusive (Jaumotte, 2003; Dao and others, 2014).
  - Childcare:
    - Female labor supply is very sensitive to childcare costs; childcare subsidies and public provision have helped boost participation (Blau, 2002; Akgunduz and Plantenga, 2011; Jaumotte, 2003; Steinberg and Nakane, 2012; Thévenon, 2013).
  - Parental leave:
    - Liberal parental leave can support return to work after childbirth but excessive leave can hurt hiring of women of child-bearing age and re-entry due to skill deterioration (Jaumotte, 2003; Thévenon, 2013; Ondrich and others, 2003; Edin and Gustavasson, 2008).
- Interaction effects:
  - Access to formal childcare is particularly effective in boosting female employment when combined with employment protection and measures supporting working mothers (Thévenon, 2013).

*II. DRIVERS OF FEMALE EMPLOYMENT — pages 8–10 of the source document.*

### III. Stylized facts: female labor force participation and its drivers
- Aggregate participation levels and variation:
  - As of 2014, the average EU female labor force participation rate among 25–54 year-olds stood at almost 80 percent.
  - Cross-country ranges (25–54 year-olds, 2014):
    - Close to 90 percent in Lithuania, Slovenia, and Sweden.
    - 66 percent in Italy.
    - 63 percent in Malta.
  - Countries with divergent trajectories: Spain, the Netherlands, and Ireland experienced pronounced rises since the early 1980s; Italy and Malta converged much more slowly.
- Recent tempo of change:
  - Average increase in participation rates in the 2000s was less than 6 percentage points, down from 12 percentage points in the 1980s and close to 7 percentage points in the 1990s (calculation based on simple average of progress in eight countries: Finland, Germany, Italy, Netherlands, Norway, Portugal, Spain, Sweden).
- Emerging Europe:
  - Less pronounced progress; some countries that had high participation in the late-1990s saw little improvement or declines (e.g., Romania fell from close to 80 percent in the late-1990s to below 75 percent in 2014).
  - Hungary increased participation by nearly 10 percentage points during the past two decades.
- Gender gap:
  - For the EU as a whole the gender participation gap stands at 12 percentage points.
  - Sweden: gender gap is 5 percentage points.
  - Malta: gender gap is 32 percentage points.
  - Gaps vary by age group and education; more education is associated with smaller participation gaps.
- Hours and part-time employment:
  - Many women work part-time, especially in advanced Europe:
    - In the Netherlands more than 80 percent of women are involved in market work and more than half of prime working-aged women are employed part-time.
    - In Germany employed men work nearly 40 hours per week, women around 30 hours per week.
    - In Bulgaria employed men and women work approximately equally at around 40 hours per week.
  - Gender gaps in hours worked are narrow (<5 percent) in the Czech Republic, Romania, and Slovakia.
  - Trends in part-time employment since 2000:
    - Declined significantly in Iceland, Norway, Poland, Sweden, and Belgium.
    - Increased in Austria, Italy, Spain, Greece, and Slovenia.

*III. FEMALE LABOR FORCE PARTICIPATION AND ITS DRIVERS — pages 11–15 of the source document.*

### IV. Structural trends and policy environment (stylized quantitative facts)
- Structural trends since early 1980s:
  - Fertility:
    - Average number of children (under 14) per woman fell from approximately 0.7 in the early 1980s to 0.5 in 2012.
  - Education:
    - Female education levels rose; the education gap with men shrunk from more than one year in 1980 to less than four months in 2012–13.
  - Attitudes:
    - Social norms toward women’s market work became more favorable for both men and women.
    - Women in parliamentary positions rose to 28 percent in 2014, up from 18 percent in 1997 (variation across countries: 10 percent in Hungary in 2014 and 45 percent in Sweden).
  - Services sector:
    - Share of employment in services rose from around 50 percent of GDP in 1980 to around 65 percent of GDP in 2013.
    - In Nordic countries, U.K., and Belgium the services sector accounts for more than 77 percent of GDP; Luxembourg at 84 percent.
  - Wage gap:
    - Gender wage gaps narrowed but remain sizable (recent range cited: more than 30 percent in Estonia to about 6.5 percent in Luxembourg, based on OECD Employment Database 2014).
- Policy variation and trends:
  - Second-earner taxation:
    - Tax treatment of married couples ranges from completely joint taxation (Germany, Ireland, Portugal) to completely separate taxation (most Scandinavian, Eastern, Southern European countries).
    - On average in 2000 the relative marginal tax rate for the second earner was twice as high as the average tax paid by families with a single earner (sample countries).
    - Tax wedge historically low in Nordic countries relative to Germany and Switzerland; generally stable over time.
  - Part-time incentives:
    - Tax incentives to working part time vary significantly; Greece, Luxembourg, and Ireland in the top range; Poland and Estonia at the opposite end.
    - Measurement challenges noted due to data limitations.
  - Family allowances:
    - Public spending composition on family-related transfers has changed; many countries cut spending on family allowance (example: Belgium family allowances declined from nearly 3 percent of GDP in 1980 to 1.5 percent in 2011).
  - Parental leave and maternity leave (OECD data highlights):
    - Large cross-country dispersion in parental leave (weeks) and paid maternity leave (weeks) with job protection varying widely (see figure summaries).
    - Examples of cross-country variation are shown but specific weeks by country are presented in the source figures and not reproduced here in tabular form.

*IV. STRUCTURAL CHARACTERISTICS AND POLICIES — pages 15–18 of the source document.*

*Source: Excerpts and figures from the referenced IMF working paper content unit.*

### 0.5 percent of GDP for the past 30 years. In Poland, it was reduced from 1.3 percent of GDP

### _wp1649 - 0.5 percent of GDP for the past 30 years. In Poland, it was reduced from 1.3 percent of GDP

### Childcare and family spending trends
- Public spending on early education and childcare gradually increased over the same time period.
- The Nordic countries remain among the countries with the highest share of GDP devoted to early childhood education and childcare, but the increase in childcare spending has occurred across nearly all countries.
- Childcare availability and cost vary markedly across countries:
  - In Germany, full-day childcare is limited; public spending on childcare and pre-primary education is below the OECD average and a subsidy is paid to families that are not using childcare for their young children (OECD, 2014).
  - In Switzerland, childcare costs are high and afterschool care availability insufficient (OECD, 2013).
- Public spending on childcare as a share of GDP is an imperfect proxy of availability of childcare and after-school programs, but it is the measure most consistently available across countries and over time.

### Parental and paternity leave trends
- Paid paternity leave increased from one day in 1990 to ten weeks as of 2013 among the countries considered.
- Paid maternity leave rose from less than 17 weeks to 20 weeks over the same period.
- Parental leave (for women with job protection, but not necessarily paid) increased from just below 60 weeks to nearly 70 weeks.
- Large cross-country variation: Slovak Republic increased parental leave from 86 weeks to around 135 weeks in the late 1980s and maintained that level; Greece and Iceland have had maternity leave less than 20 weeks for the past 30 years.
- A tax deduction for childcare costs has recently been implemented (country-specific mention in source).

### Data and methodology
- Primary microdata: 2002 and 2012 rounds of the ‘Family and Changing Gender Roles’ module of the ISSP, combined with country-level policy and other factors.
- Sample focus: 24 European economies from the ISSP.
- Labor supply model estimated (extensive margin): indicator = 1 if individual j in country i employed at time t.
- Individual controls included: age and its square, number of years of schooling and its square, marriage status, whether mother worked, and attitudes towards gender roles.
- Country-level controls included: three-year average output gap, country-level average male employment rate among 25–54 year olds.
- Fixed effects: country fixed effects and time fixed effects.
- Estimation: linear probability model for extensive margin; alternative specifications include probit for extensive margin, Tobit for hours (intensive margin), and models for full-time vs part-time and hours worked.
- Heteroskedasticity-adjusted standard errors clustered at the country-year level.
- Limitations: causality is difficult to establish; policy endogeneity and reverse causality possible; attitudes may be endogenous to labor market participation.

### Empirical results — Extensive margin (key coefficients and findings)
- Structural characteristics:
  - Each additional child in the household is associated with a 6 percentage point lower likelihood of female employment (reported coefficient: -0.0614***, etc.; summary: "Each additional child living in the household is associated with a 6 percentage point lower likelihood of female employment.").
  - Education positively related to employment: an additional year of schooling associated with a significantly higher employment probability (Education (years) coefficients e.g., 0.0526*** in column (1)).
  - Life-cycle pattern: employment rates increase with age, peaking around 45 years, and falling thereafter.
  - Married women are not less likely to be employed on average, conditional on other observable characteristics.
  - Intergenerational transmission: daughters of employed mothers more likely to be employed (Mother working coefficients e.g., 0.0385***).
  - Attitudes: Women with more egalitarian gender attitudes significantly more likely to work; attitudes account for close to one-fifth of the model's explanatory power.
- Policy associations:
  - Relative tax rates on secondary earners negatively associated with female employment:
    - Example magnitude: moving from the 25th percentile to the 75th percentile of the reduction in the tax ratio during 2002–12 would imply a 5 percentage point higher female employment rate (all else equal), given the estimated effect.
    - Tax on the second earner coefficients in regressions: e.g., -0.4615***, -0.5330***, -0.3934*, -0.4263**, -0.7531***, -0.6557*** (various specifications).
  - Part-time incentives positively associated with employment (coefficient e.g., 0.1868*** in a specification).
  - Childcare spending positively related to employment:
    - Coefficients include 0.1160*, 0.1168**, 0.1025*** across specifications.
    - Example magnitude: moving from the 25th percentile to the 75th percentile of the increase in childcare during 2002–12 would imply a 2.5 percentage point higher female employment rate (all else equal).
  - Family allowance spending tends to be negatively correlated with employment (coefficients e.g., -0.1051**, -0.1048***).
  - Parental leave shows an inverted U-shaped relationship:
    - Parental leave coefficients: 0.1548***, 0.2079***; squared term negative and significant (e.g., -0.0004***, -0.0007***).
    - Estimated peak suggests parental leave beyond around 140 weeks could discourage employment at the extensive margin (based on coefficient estimates and optimization).
- Decomposition of 2002–12 changes:
  - Predicted change in female employment closely matches actual change for countries with both years.
  - Drivers of rise in female employment: higher educational attainment; reduction in number of kids; more gender-egalitarian attitudes.
  - Policy contributions: public spending on childcare, reductions in relative tax on the second earner, and reduced family allowance contributed to raising female employment.
  - A few countries lowered parental leave weeks between 2002 and 2012, contributing negatively to employment.
  - Other macro controls (including the output gap) contributed negatively to female employment.

### Comparative results — Women versus men and advanced versus emerging Europe
- Women versus men:
  - Policies examined are more strongly associated with employment of women than men.
  - Relative tax on the second earner affects men but with a much smaller magnitude (women coefficients e.g., -0.7531*** vs men e.g., -0.2192***).
  - Childcare spending does not appear relevant for male labor force participation (women: 0.1168**, 0.1025***; men: -0.0159, -0.0221).
  - Conclusion: policy changes could help narrow the gender employment gap.
- Advanced vs emerging Europe:
  - Differential effects observed across groups:
    - Relative tax on the second earner negative and significant in advanced Europe; effect in emerging Europe less consistent across specs.
    - Childcare provision interacted with emerging Europe indicator is positive and highly significant, suggesting childcare support’s importance is mainly driven by emerging market countries (childcare spending, EMs coefficients e.g., 0.5175***, 0.5014***).
    - Parental leave appears a stronger determinant of women’s employment rates in advanced countries.

### Intensive margin (hours and full-time participation)
- Dependent variable variations:
  - Full-time vs part-time defined as at least 30 hours per week (indicator = 1 for full-time).
  - Hours worked examined for employed women and for all women (allowing for extensive margin effects).
- Key intensive-margin findings:
  - Structural characteristics:
    - For employed women, education is not a significant determinant of labor supply at the intensive margin.
    - Married working women tend to be employed at less than full time (marriage coefficients negative for full-time vs part-time).
  - Policies:
    - Higher relative tax on the second earner associated with both lower probability of employment and fewer hours worked (examples: tax on second earner coefficient in hours worked regressions e.g., -6.0473***, -23.5055***).
    - Childcare provision appears important only at the extensive margin (childcare spending coefficients on hours: mixed; childcare spending coefficient for all women hours e.g., 3.0667* in one specification but negative for employed-only sample).
    - Parental leave:
      - Positively associated with employment at the extensive margin.
      - At the intensive margin, longer parental leave is associated with shorter work weeks for employed women (parental leave coefficient e.g., -0.1338*** for full-time vs part-time; parental leave coefficient -4.9310*** for hours worked employed women).
      - Interpretation caveat: association may be influenced by distribution of leave over several years (e.g., taking one or two days per week).

### Robustness checks
- Probit estimation for the extensive margin yields similar main results.
- Sample restricted to women with children: effects of policies are larger in magnitude and more precisely estimated.
- Balanced country sample (countries present in both 2002 and 2012): main results unaffected.
- Alternative tax measures and exclusion of high-tax outliers: higher relative tax on the second earner remains associated with lower female employment.
- Tobit estimation for hours (all women) supports main findings.
- Overall robustness: main qualitative conclusions hold across alternative specifications, samples, and estimation methods.

### Policy conclusions and recommendations (as presented)
- Individual demographics, attitudes towards gender roles, and policies together drive women’s decisions to work on both extensive and intensive margins.
- Policy implications:
  - Tax policy design should be mindful of disincentives for the second earner, particularly in advanced countries.
  - The composition of public spending on families could be recalibrated to support women’s entry into the labor force:
    - Lump-sum cash family allowance transfers appear to deter women from working.
    - Higher public spending on early childhood education and childcare is associated with a boost in the female employment rate, particularly in emerging European countries.
- On intensive margin: fiscal disincentives from relative taxation of the second earner influence both the intensive and extensive margins; childcare provision and family allowance mainly affect the extensive margin.

*Source: IMF staff calculations (content based on the provided IMF PDF chapter/section).*

### REFERENCES

### _wp1649 - REFERENCES

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### Appendix A. Data — i. International Social Survey Programme (ISSP)
- Micro-level data: 2002 and 2012 surveys in the ‘Family and Changing Gender Roles’ module of the ISSP.
- Variable definitions:
  - Employed: 1 if hours worked > 0 and hours or incidence of work reported; 0 if respondent reported not being employed.
  - Hours worked: Number of weekly hours worked. Responses such as ‘time varies’ or ‘don’t know’ are set to missing.
  - Number of children: Number of children living in household. Set to zero for “.n” and missing for “.a”, except in specific country cases where other information is noted.
  - Education: Years of schooling.
  - Age: Age of respondent.
  - Mother working: Equals one if respondent reports that his or her mother ever worked for pay before respondent turned 14 years old; 0 otherwise.
  - Married: Equals one if the legal partnership status is married.
  - Attitude: Principal component of listed questionnaire responses (Question 1: five items; Question 2: two items; Question 3: two items) with specified ranking scales.
- Appendix Table A1. Summary Statistics: Individual Attributes (based on sample in Table 1, column 1)
  - Number of observations / Variable / Average / Std. dev. / Min / Max:
    - Employed: 14,519    0.8 0.401 1
    - Hours worked: 14,465    28.7 18.30 96
    - Fulltime vs. part-time: 14,465    0.6 0.501
    - Number of children: 14,519    1.0 1.10 11
    - Education: 14,519    13.3 3.90 30
    - Age: 14,519    39.9 8.42 55 4
    - Mother working: 14,519    0.6 0.501
    - Married: 14,519    0.6 0.501
    - Attitude: 11,793    0.7 1.8 -5.3 4.4
  - Source: ISSP and IMF staff calculations.
- Appendix Table A2. Pairwise Correlation Coefficients: Individual Characteristics (based on sample in Table 1, column 1; stars denote significance at the 5 percent level)
  - Correlation matrix (rows/columns): Employed; Hours worked; Number of children; Education; Age; Mother working; Married; Attitude
    - Employed — Employed: 1
    - Employed — Hours worked: 0.8360*
    - Employed — Number of children: -0.1089*
    - Employed — Education: 0.1803*
    - Employed — Age: 0.0272*
    - Employed — Mother working: 0.0782*
    - Employed — Married: -0.0552*
    - Employed — Attitude: 0.2446*
    - Hours worked — Hours worked: 1
    - Hours worked — Number of children: -0.1644*
    - Hours worked — Education: 0.1722*
    - Hours worked — Age: 0.0166*
    - Hours worked — Mother working: 0.1159*
    - Hours worked — Married: -0.0954*
    - Hours worked — Attitude: 0.2364*
    - Number of children — Number of children: 1
    - Number of children — Education: -0.0012
    - Number of children — Age: -0.1820*
    - Number of children — Mother working: 0.0181*
    - Number of children — Married: 0.2422*
    - Number of children — Attitude: -0.0595*
    - Education — Education: 1
    - Education — Age: -0.1507*
    - Education — Mother working: 0.1150*
    - Education — Married: -0.0876*
    - Education — Attitude: 0.2891*
    - Age — Age: 1
    - Age — Mother working: -0.1702*
    - Age — Married: 0.1544*
    - Age — Attitude: -0.0742*
    - Mother working — Mother working: 1
    - Mother working — Married: -0.0671*
    - Mother working — Attitude: 0.1019*
    - Married — Married: 1
    - Married — Attitude: -0.1209*
    - Attitude — Attitude: 1

- Appendix Figure A1. ISSP Statistics (country-level averages based on regression sample in Table 1, column 1): country lists and plotted comparisons for 2002 vs. 2012 for:
  - Average Employment Rate for Women Aged 25–54 (Percent) — countries listed (Denmark, Norway, Iceland, Austria, Finland, France, Sweden, Slovenia, Czech Republic, Slovak Republic, Switzerland, Latvia, Lithuania, Germany, Bulgaria, Poland, Ireland, United Kingdom, Spain, Croatia, Belgium, Hungary, Netherlands, Portugal)
  - Average Number of Hours Worked (Hours per week) — countries listed (Norway, Denmark, Czech Republic, Slovenia, Slovak Republic, Iceland, Latvia, Finland, Sweden, Lithuania, Bulgaria, Poland, France, Austria, Croatia, Germany, Spain, Ireland, Switzerland, United Kingdom, Belgium, Hungary, Netherlands, Portugal)
  - Average Age of Women Aged of 25-54 (Years) — countries listed with 2012 and 2002 comparisons (Slovak Republic, Ireland, Switzerland, Denmark, Germany, Sweden, Norway, Lithuania, Spain, Bulgaria, Latvia, Croatia, Finland, Czech Republic, France, United Kingdom, Slovenia, Poland, Iceland, Austria, Belgium, Hungary, Netherlands, Portugal)
  - Share of Women with Working Mother (Percent) — countries listed (Latvia, Czech Republic, Bulgaria, Lithuania, Slovak Republic, Finland, Iceland, Sweden, Denmark, Slovenia, Poland, Norway, United Kingdom, Austria, Germany, France, Switzerland, Croatia, Ireland, Spain, Belgium, Hungary, Netherlands, Portugal)
  - Average Marriage Rate of Women Aged 25-54 (Percent) — countries listed (Poland, Croatia, Slovak Republic, Switzerland, Austria, Bulgaria, Ireland, Lithuania, Spain, Czech Republic, Denmark, Germany, Latvia, France, Slovenia, Norway, Finland, Sweden, Iceland, United Kingdom, Belgium, Hungary, Netherlands, Portugal)
  - Attitudes Toward Women Working (Principal component of response to questionnaire) — country order shown with 2002 and 2012 comparisons (Denmark, Sweden, Norway, Iceland, Finland, Germany, Slovenia, France, Spain, Croatia, Ireland, United Kingdom, Poland, Slovak Republic, Switzerland, Czech Republic, Austria, Lithuania, Bulgaria, Latvia, Belgium, Hungary, Netherlands, Portugal)

### Appendix A. Data — ii. Country-level variables
- Country-level data sources: OECD and IMF World Economic Outlook database.
- Variable definitions and sources:
  - Relative marginal tax rates on second earners, Thévenon (2013) (in natural logarithm)
    - Definition: ratio of the marginal tax rate on the second earner to the tax wedge for a single-earner couple with two children earning 100% of AW earnings. Data are winsorized at 10.
    - Marginal tax rate on the second earner: the share of the wife’s earnings which goes into paying additional household taxes. A denotes wife does not earn any income; B denotes wife’s gross earnings are 67 percent of the average wage (AW). In both situations husband earns 100% of AW; couple has two children. Difference between gross and net income includes income taxes, employee’s social security contribution, and universal cash benefits. Means-tested benefits based on household income are not included (apart from some child benefits that vary with income).
    - Sources: OECD “tax models” and IMF staff calculations.
  - Relative marginal tax rates on second earners, Jaumotte (2003) (in natural logarithm)
    - Definition: ratio of the marginal tax rate on the second earner to the tax wedge for a single person with no children earning 67% of AW earnings; numerator defined as in Thévenon (2013).
    - Sources: OECD “tax models” and IMF staff calculations.
  - Tax incentives to work part-time (in natural logarithm)
    - Definition: The difference between the net income of two-earner couple (one earning 100% AW and the other 67% AW) and the net income of a single person earning 167% AW, as a share of the latter. Two-earner couple has two children; single person has no child.
    - Note: Ideal specification would compare husband-only income (133 percent of APW) vs. shared earnings (100 percent and 33 percent), but data availability limits the given specification.
    - Sources: OECD “tax models” and IMF staff calculations.
  - Public Expenditures on Child Care (in natural logarithm)
    - Definition: Public spending on early child education and care, in percent of GDP. Latest data from 2011; one year lagged observation used in regressions.
    - Sources: OECD Social Expenditure Database; and IMF staff calculations.
  - Family allowance (in natural logarithm)
    - Definition: public spending (allowance) on family, in percent of GDP. Latest data from 2011; one year lagged observation used in regressions.
    - Sources: OECD Social Expenditure Database.
  - Parental leave
    - Definition: weeks of parental leave for women with job protection.
    - Sources: OECD Employment Database.
  - Output gap
    - Definition: difference between real potential output and real output, in percent of real output. For 2002, the output gap is the three-year average gap during 2000–02. For 2012, the three-year average covers 2010–12.
    - Sources: IMF World Economic Outlook, October 2015.
  - Male employment rate (in natural logarithm)
    - Definition: number of employed men in the age group 25 to 54 years old relative to the population in the same age group. Calculated as (1-male unemployment rate)*male participation rate.
    - Sources: OECD Employment Database and IMF staff calculations.

- Appendix Table A3. Summary Statistics: Policies (based on sample in Table 1, column 1; variables in this table are not logged)
  - Number of observations / Average / St. dev. / Min / Max:
    - Tax on the second earner: 34 2.9 2.6 1.0 10.0
    - Part-time incentives: 34 0.2 0.1 0.0 0.3
    - Childcare spending: 34 0.7 0.5 0.2 2.0
    - Family allowance: 34 0.9 0.4 0.1 2.0
    - Parental leave: 33 85.1 54.8 13.0 156.0
  - Source: OECD and IMF staff calculations.

- Appendix Table A4. Pairwise Correlation Coefficients: Policies (based on sample in Table 1, column 1; stars denote significance at the 5 percent level)
  - Correlation matrix (Tax on the second earner; Part-time incentives; Childcare spending; Family allowance; Parental leave)
    - Tax on the second earner — Tax on the second earner: 1
    - Tax on the second earner — Part-time incentives: 0.2606*
    - Tax on the second earner — Childcare spending: -0.2783*
    - Tax on the second earner — Family allowance: -0.0098
    - Tax on the second earner — Parental leave: 0.0487*
    - Part-time incentives — Part-time incentives: 1
    - Part-time incentives — Childcare spending: 0.2141*
    - Part-time incentives — Family allowance: 0.5347*
    - Part-time incentives — Parental leave: 0.0959*
    - Childcare spending — Childcare spending: 1
    - Childcare spending — Family allowance: 0.1066*
    - Childcare spending — Parental leave: 0.0128*
    - Family allowance — Family allowance: 1
    - Family allowance — Parental leave: 0.0723*
    - Parental leave — Parental leave: 1

### Appendix B. Country coverage
- Appendix Table B1. Country Coverage (Number of observations based on Table 1, column 1)
  - Advanced economies (2002 / 2012)
    - Austria: 730 346
    - Belgium: 348
    - Denmark: 387 391
    - Finland: 329 313
    - France: 748 737
    - Germany: 353 451
    - Iceland: 272
    - Ireland: 475
    - Netherlands: 345
    - Norway: 413 377
    - Portugal: 301
    - Spain: 554 681
    - Sweden: 288 271
    - Switzerland: 289 316
    - United Kingdom: 564 241
    - Total advanced: 5,649 4,871
  - Emerging economies (2002 / 2012)
    - Bulgaria: 253
    - Croatia: 292
    - Czech Republic: 235 526
    - Hungary: 246
    - Latvia: 323
    - Lithuania: 339
    - Poland: 372 286
    - Slovak Republic: 325 277
    - Slovenia: 270 255
    - Total emerging: 1,448 2,551
  - Total Europe: 7,097 7,422
  - Sources: ISSP and IMF staff calculations.

*Source: _wp1649 - REFERENCES (PDF).*/

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