Understanding the Rising Trend in Female Labour Force Participation

49 Pages Posted: 15 Jun 2020

See all articles by Nicolas Herault

Nicolas Herault

University of Melbourne - Melbourne Institute: Applied Economic & Social Research

Guyonne R.J. Kalb

University of Melbourne - Melbourne Institute: Applied Economic & Social Research; IZA; ARC Centre of Excellence for Children and Families over the Life Course

Multiple version iconThere are 4 versions of this paper

Date Written: May 20, 2020

Abstract

Female labour force participation has increased tremendously since World War II in developed countries.Prior research provides piecemeal evidence identifying some drivers of change but largely fails to present a consistent story. Using a rare combination of data and modelling capacity available in Australia, we develop a new decomposition approach to explain rising female labour force participation since the mid-1990s. The approach allows us to identify, for the first time, the role of tax and transfer policy reforms as well as three other factors that have been shown to matter by earlier studies. These are:

(i) changes in real wages,

(ii) population composition changes, and

(iii) changes in labour supply preference parameters.

A key result is that – despite the ongoing emphasis of public policy on improved work incentives for women in Australia and elsewhere – changes in financial incentives due to tax and transfer policy reforms have contributed relatively little to achieve these large increases in participation. Instead, the other three factors drive the increased female labour force participation.

Keywords: Female Labour Force Participation, Employment Rate, Tax-Transfer Policy, Behavioural Micro-simulation, Decomposition

JEL Classification: H31, J22, J31

Suggested Citation

Herault, Nicolas and Kalb, Guyonne R.J., Understanding the Rising Trend in Female Labour Force Participation (May 20, 2020). Tax and Transfer Policy Institute working paper 5/2020, Available at SSRN: https://ssrn.com/abstract=3605902 or http://dx.doi.org/10.2139/ssrn.3605902

Nicolas Herault (Contact Author)

University of Melbourne - Melbourne Institute: Applied Economic & Social Research ( email )

Level 5, FBE Building, 111 Barry Street
Parkville, Victoria 3010
Australia

HOME PAGE: http://www.findanexpert.unimelb.edu.au/researcher/person125238.html

Guyonne R.J. Kalb

University of Melbourne - Melbourne Institute: Applied Economic & Social Research ( email )

Level 5, FBE Building, 111 Barry Street
Parkville, Victoria 3010
Australia

IZA ( email )

P.O. Box 7240
Bonn, D-53072
Germany

ARC Centre of Excellence for Children and Families over the Life Course ( email )

185 Pelham Street
Carlton, 3053
Australia

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