Women have been gaining ground in labor markets, transitioning into paid work and increasingly into leadership positions in Latin America and the Caribbean. But far more progress is needed to create opportunities in which women can realize their economic potential. While the region has bridged 72.6% of its gender gap, progress is currently stagnant. Over the last year, 16 out of the 22 countries of the region have reduced their gender gap by less than one percentage point, and at that pace it will take 67 years to close the gap altogether.
This slow advance not only affects individual women. As a recent IDB study reveals, the gender gap in the labor market has sizable economic costs for the countries of the region, and reducing it would significantly boost economic growth and development.
Motherhood and Employment
Motherhood has much to do with creating and widening the gender gap. A study from Denmark, for example, shows a sharp divergence in men and women’s labor force participation immediately after their first child’s birth, with no recovery for women even after ten years. This effect is of particular concern in developing countries, where less progressive attitudes about women in the labor force, less female decision-making power in the household, and gender-based violence exacerbate the gender gap. In Mexico, as another study reveals, a child’s birth reduces mother’s labor force participation by 16 percentage points (32%), even 15 months later, while leaving it unchanged for the father. These findings are consistent with a gender gap and motherhood penalty that peak between 20 and 40 years of age when people are most likely to have children.
Several factors, including specialization, gender roles, personal preferences, and labor market discrimination may be driving the wedge in labor force participation between men and women. Social norms are another barrier, including the question of who bears responsibility for household chores and childcare. With women bearing a disproportionate burden in terms of taking care of their children, childcare can be crucial to reducing the gender gap. However, the relationship between childcare availability and labor force participation is hard to measure because parents decide those two things simultaneously. For example, a mother may take her child to daycare and have a full-time job. But how do we know whether she works because she has access to childcare or whether she uses childcare because she has a job?
A Study in Mexico on Childcare and the Gender Gap
To understand the causal relationship between the availability of childcare and employment, we need to vary external factors—or, as economists say, employ exogenous variation. That is what I did in a study I did in Mexico in which I used the importance of grandmothers as caregivers—and the timing of their deaths—to examine the issue.
Grandmothers are essential sources of childcare across the globe. In Europe, between 50% and 70% of grandmothers provide at least some childcare during the year, and in Mexico, they are the primary childcare providers, looking after almost 40 percent of children up to six years old—as much as schools and daycare combined. Leveraging the importance of grandmothers as childcare providers, my study uses the timing of grandmothers’ deaths to estimate the causal relationship between childcare availability and the employment of their parents.
The study finds that a grandmother’s death, through its impact on childcare, reduces the probability of mothers being employed by 12 percentage points (27%), an effect that lasts for at least a year. Consistent with the lack of flexibility in the labor market, there is no evidence of full-time employed mothers transitioning to part-time jobs: they become unemployed instead. Indeed, mothers’ probability of being employed full-time or part-time declined by 25% and 40% respectively after the grandmother’s death and, largely as a result, their income and hours worked decreased by 53% and 30%.
These results show just how much the lack of childcare feeds into and perpetuates the gender gap in the labor market, accounting for more than half the entire motherhood penalty in Mexico. Mothers clearly are much more affected by the lack of childcare. The grandmother’s death has an effect on mothers’ employment that is 14.7 percentage points larger than on fathers—half of the gender gap in employment in Mexico. Unsurprisingly, the gender division in childhood responsibilities also extends across generations. As grandfathers rarely provide childcare, there is no employment effect at all for either the mothers or fathers when they die.
The Importance of Childcare Options
All this points to the importance of childcare options in reducing the gender gap, and, in fact, the effect on mothers’ employment after a grandmother’s death is smaller in municipalities where public daycare is more available or private daycare is more affordable.
The main driver of the gender gap and the motherhood penalty in labor force participation in Mexico, it seems, is the lack of childcare options and the overwhelming roles assigned to women as compared to men when it comes to taking care of their children. While it may take generations to change customs and gender roles, childcare-related policies have the potential in the short term to accelerate the reduction of the gender gap in the labor market.