## To Boost Growth: Employ More Women

_IMF Blog, September 14, 2016_

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## Bibliographic details
- Authors: Christine Lagarde
- Published: September 14, 2016

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### Summary
- Women’s employment supports macroeconomic growth; IMF studies show significant gains when women participate more fully in the labor market.
- A forthcoming IMF study suggests that a 1 percentage point increase in the labor force participation of women with an advanced degree would raise Canada’s overall labor productivity growth by 0.2 to 0.4 percentage point a year.
- Eliminating the current gap of 7 percentage points between male and female labor force participation could make the level of real GDP about 4½ percent higher today.

### Evidence and impact
- Tapping into Canada’s highly educated pool of women could:
  - offset the shrinking labor force due to an aging population,
  - boost growth potential in the medium term,
  - raise living standards for all Canadians.
- Canada’s labor productivity is about 20 percent below the level in the United States and is growing at less than 1 percent a year.
- Since 1980, Canada’s female labor force (aged 25–54 years) has increased by 3.2 million, compared with a 2.1 million increase in its male labor force.

### Canadian experience and past policy reforms
- Female labor participation progress:
  - 1980: 60 percent of Canadian women aged 25–54 years were in the labor market.
  - Four decades later: Canada’s female labor participation rate is over 80 percent.
  - United States comparison: the rate has fallen since the mid-1990s to about 74 percent.
- Two effective reform initiatives:
  - Tax reforms (late 1980s and 1990s):
    - Replaced deductions (including on income earned by secondary earners) with tax credits, broadened the tax base, and lowered the marginal tax rate structure.
    - Introduced tax cuts and benefits for families with children in the 1990s, improving work incentives for secondary earners.
  - Family-support policies (late 1990s onward):
    - Lengthened maternity and parental leaves from a maximum of 37 weeks to 52 weeks in 2001.
    - Established a national system of early learning and child care, supported by increased government spending on early childhood development.

### Remaining gaps and policy recommendations
- Current gaps:
  - 2015 participation rates: women 82 percent, men 92 percent.
  - Despite more women receiving university degrees in 2015, their labor participation rate is 7 percentage points lower than men’s.
  - Canada’s gender wage gap is well above the Organization for Economic Cooperation and Development average.
  - Women make up only one in four senior managers.
  - Paid maternity and parental leave is the 7th longest in advanced OECD economies, but public spending on early education and care still falls short of many advanced economies.
- Policy recommendations and directions:
  - Narrow remaining policy gaps in family support and work incentives for secondary earners.
  - Target family support policies to enhance incentives to work:
    - The Canada Child Benefit (introduced in the 2016 federal budget) provides benefits to low- and middle-income families and is a step in the right direction.
    - Consider better targeting of benefits toward increasing childcare subsidies for working parents whose parental leave has expired.
  - Address the “invisible glass ceiling” to increase women’s representation in senior management:
    - Provide incentives for women’s representation on corporate boards.
    - Reform the parental leave system so more fathers are willing to take leave.
  - Bold decisions are needed to change corporate cultures and shift social norms to encourage younger generations of women to pursue professional careers.

### Key statistics (preserved exactly)
- 1 percentage point increase in labor force participation of women with an advanced degree → raises labor productivity growth by 0.2 to 0.4 percentage point a year.
- Current gap between male and female labor force participation: 7 percentage points.
- Potential increase in real GDP level if gap eliminated: about 4½ percent higher today.
- Canada’s labor productivity: about 20 percent below the level in the United States.
- Labor productivity growth: less than 1 percent a year.
- Female labor force change since 1980 (aged 25–54 years): increased by 3.2 million.
- Male labor force change since 1980: increased by 2.1 million.
- 1980 female participation (aged 25–54 years): 60 percent.
- Four decades later: Canada’s female labor participation rate is over 80 percent.
- United States female participation rate (mid-1990s to 2015): about 74 percent.
- 2015 participation rates: women 82 percent, men 92 percent.
- Maternity and parental leave expansion: from a maximum of 37 weeks to 52 weeks in 2001.
- Paid maternity and parental leave ranking: 7th longest in advanced OECD economies.
- Women in senior management: one in four.
- Canada Child Benefit: introduced in the 2016 federal budget.

*Source: To Boost Growth: Employ More Women, Christine Lagarde, September 14, 2016*

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## References

- [IMF studies](https://www.imf.org/external/pubs/cat/longres.aspx?sk=40915.0)
- [Two Canadian reform initiatives](http://www.imf.org/external/pubs/cat/longres.aspx?sk=18916)
- [the IMF and Gender](http://www.imf.org/external/themes/gender/index.htm)

_Source: https://www.imf.org/en/blogs/articles/2016/09/14/to-boost-growth-employ-more-women_