Policies to Expand Women’s Opportunity

What is the best way to expand opportunity for women? A week after the White House produced their own recommendations about female economic opportunity, Aparna Mathur and Abby McCloskey over at AEI have produced a report on how to improve economic opportunity for women.

Women and Reform Conservativism

The whole paper is well worth a read (and not only because they cite our work!), but here are the three main points made in the report:

  • Women are disproportionately disadvantaged by high child care costs, low wages, the structure of numerous tax and benefit programs, and the economic challenges of raising a child in a single parent household.
  • Proposed reforms to expand female opportunity, such as child care credits or the FAMILY act’s paid leave provisions, are not well-targeted and may even exacerbate some of the current problems, such as the gender pay gap.
  • Alternatives reforms suggested by the authors include streamlining the current child care subsidies and tax credits, reforming the EITC, and improving educational opportunity for young women.

Don’t Short Change Paid Family Leave

We agree with some of the policy recommendations in this report (such as reforming EITC or using social marketing campaigns to reduce unwed births.) But the authors are too quick to dismiss paid family leave as a policy that expands women’s opportunity. They claim that providing paid leave may reduce women’s wages, citing a paper by Christopher Ruhm that finds that “short periods of leave may have marginal impacts on females’ earnings, longer paid entitlements are associated with substantial wage reductions due to time taken out of the labor force.”

But there are two facts that complicate this claim:

  1. The United States is nowhere near the level of paid family leave where workers are guaranteed the amount of leave that Ruhm described as “longer paid entitlements.”  The FAMILY act proposes giving 12 weeks of partially paid family leave to workers. In Ruhm’s study, a “short period” of leave was defined as three months. If anything, his findings suggest enacting the FAMILY act would increase women’s employment rate and have a marginal positive impact on their earnings.
  1. Paid family leave policies that are designed to encourage gender symmetry both at work and in the home are less detrimental to women’s relative wages. It is true that many countries with highly generous paid maternity leave often have higher wage gaps. Paid leave policies that entrench the idea that women (and only women) should take time out of the labor force to raise children are a bad idea. But Norway, whose paid family leave includes time designated specifically for the father, has a smaller gender wage gap than the United States.

The United States’ current leave policy is actually surprisingly equitable across genders: for the depressing reason that neither men nor women are guaranteed any paid leave. Current policy is equally unfair to all working parents. There’s another solution: guarantee paid leave to both parents and encourage fathers to take on child care.