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Adieu Rabenmutter—culture, fertility, female labour supply, the gender wage gap and childcare

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Abstract

This paper studies the effect of cultural attitudes on childcare provision, fertility, female labour supply and the gender wage gap. Cross-country data show that fertility, female labour force participation and childcare provision are positively correlated with each other, while the gender wage gap seems to be negatively correlated with these variables. The paper presents a model with endogenous fertility, female labour supply and childcare choices driven by cultural attitudes which fits these facts. There may exist multiple equilibria: one with zero childcare provision, low fertility and female labour supply and high wage gap and one with high childcare provision, high fertility and female labour supply and low wage gap.

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Notes

  1. Here and in the other figures below, all variables have been purged of the influence of a dummy for being a formerly communist country and of continent dummies. Regression lines are shown in the figures whenever the regression coefficients are significant. Data sources are listed in the Appendix.

  2. See also an article by (Henkel 2003) in the German newspaper Süddeutsche Zeitung from whom the title of this paper was borrowed.

  3. See Bundesagentur für Arbeit (2007). In recent years, there has been some convergence in female employment rates.

  4. Note that in other countries of the former Soviet bloc, the percentages agreeing that a preschool child with a working mother was likely to suffer were much higher, over 60 % for instance in Hungary, Bulgaria and Russia.

  5. See also Giavazzi et al. (2013).

  6. The answers are coded from 1 to 5 where strong agreement is coded as 1 and strong disagreement as 5.

  7. This assumption is line with reality. In the model, division of labour gives incentives for negative assortative matching (Becker 1991). However, assortative mating could still obtain if there was a benefit from interacting with the partner which is increasing in the wage (Bauernschuster and Borck 2012).

  8. It will be shown below that wage heterogeneity plays no major role in the model (due to the assumption of Cobb-Douglas preferences) and, hence, the independence assumption is inconsequential.

  9. Since labour supply is \(1-\Theta -L-\theta n\) and leisure rises less than proportionately with \(\Theta \), both labour supply and leisure increase when the time endowment rises through a fall in \(\Theta \).

  10. Note that \(\theta _{J}\) affects the price of children, but not the price of leisure, which is simply the female wage.

  11. See the classic work by Mincer and Polachek (1974) and, more recently, Erosa et al. (2010). It would be possible to derive this wage gap endogenously by adding a choice of human capital. To keep the model simple, I simply assume an exogenous wage gap.

  12. The couple’s full income is \(w_{m}(1+(1-\Theta _{J})^2)\) and the price of children \(w_{m}(1-\Theta _{J})\). So both income and price of children increase proportionately with \(w_{m}\), and under Cobb-Douglas utility, the income and substitution effects are both one in absolute value.

  13. In fact, a couple’s “cultural attitude” towards daycare could be thought of as the product \(\beta H^{\alpha }\). That is, if more children are in daycare, each couple’s attitude towards childcare becomes more positive.

  14. Since \(H\le 1\), \(Q_{\mathrm {C}}\) is decreasing in \(\alpha \), but the marginal change in \(Q_{\mathrm {C}}\) due to an increase in H is increasing in \(\alpha \).

  15. Fernandez (2007) and Fogli and Veldkamp (2011) both use learning models to study the evolution of female labour force participation. In their models, women have some prior belief about the cost of labour supply, which they update using information from women around them. This amounts to using the observed female labour force participation in the reference group to infer the cost of labour supply. Translated to the current setting, the learning framework implies that couples use aggregate childcare usage to infer the effect of childcare on their children.

  16. It might be preferable to make the crowding factor depend on the children using childcare instead of families using it, but this would not change the qualitative nature of results. It can also be shown that the quantitative results would barely change.

  17. If this were not the case, the median couple would vote for positive taxes only if total usage is small enough. It can then be shown that an equilibrium might not exist, and if an equilibrium does exist, it will be unique. See Online Appendix A . In order to concentrate on the most interesting case where multiple equilibria exist, I assume \(\alpha \ge \gamma \).

  18. Note also that the logarithmic utility implies that the optimal tax rate is independent of the wage: when the wage rises, couples want higher spending since childcare quality is a normal good, but lower taxes since the tax price of childcare increases with the wage. Given that the income and substitution elasticity are both one (in absolute value) with Cobb-Douglas utility, the two effects just cancel out. Furthermore, \(V_{\mathrm {N}}(\bullet )|_{\tau =0}\) and \(\max _{\tau } V_{\mathrm {C}}(\bullet )\) both shift up with \(w_{m}\) by the same amount (see (8)) so that in effect the wage is inconsequential for the voting decision.

  19. Particular parameters are described in the next section. Note that in the definition of \(\hat \beta \), childcare spending is replaced by its equilibrium value.

  20. Since Luxemburg is somewhat of an outlier, the GDP variable controls for a Luxemburg dummy in addition to the continent and communism dummies. Dropping Luxemburg actually increases the positive correlation between the total fertility rate (TFR) and per-capita GDP.

  21. There are no data for children under 3 for Switzerland, but I group it along with Austria and Germany, since its enrolment rate for children aged 3–6 is 48 %, among the lowest of the OECD countries.

  22. See OECD (2010) for the data. Female labour supply is found by averaging women’s usual working hours (Table LMF2.1 in the OECD family database) and multiplying by the maternal employment rate from Table LMF1.2.

  23. Borge and Rattsø (2008) estimate a population elasticity between \(-0.69\) and \(-0.79\) for per-capita spending on childcare. Older studies have estimated crowding elasticities for local education close to one. Hence, I take \(\gamma =0.9\) as a reasonable value for the crowding elasticity.

  24. According to Krause et al. (2010), this was the hourly male wage in Germany in 2005–2009 (in euros).

  25. The effect of changing \(\gamma \) is not analysed separately, since what matters for the equilibrium is only the difference \(\alpha -\gamma \).

  26. From Proposition 5, we know that the equilibrium does not change with \(\theta _{\mathrm {C}}\), while an increase of \(\Theta _{\mathrm {C}}\) works like a decrease in \(\Theta _{\mathrm {N}}\).

  27. The intuition for this result is as follows: increasing childcare fees reduces fertility by couples who use childcare. Since leisure is not affected with Cobb-Douglas utility, labour supply must rise.

  28. According to data from OECD (2010), net childcare fees in OECD countries represent between 3 and 51 % of net family income, with an average of 12 %.

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Acknowledgments

I would like to thank Alexander Bick as well as seminar participants at DIW Berlin, University of Dortmund, ifo Institute Munich, UC Irvine, University of Passau, the EALE Conference 2011 and the Verein f¨ur Socialpolitik Annual Conference 2011 for the comments. Thanks are also due to an anonymous referee and the editor Junsen Zhang for the helpful comments. Part of this paper was written during a research visit to UC Irvine. Special thanks to Jan Brueckner and the Economics Department for their hospitality.

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Authors and Affiliations

  1. Department of Economics, University of Potsdam, 14482, Potsdam, Germany

    Rainald Borck

  2. CESifo, Munich, Germany

    Rainald Borck

  3. DIW Berlin, Berlin, Germany

    Rainald Borck

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Correspondence to Rainald Borck.

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Responsible editor: Junsen Zhang

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Appendix

Appendix

1.1 Data sources

Data for fertility, female labour force participation and the gender earnings gap are from OECD (2010). Data for West and East Germany are additionally taken from Statistisches Bundesamt (2010b) and Kreyenfeld et al. (2009). The attitudinal data are taken from the International Social Survey Programme 2002 and Eurobarometer wave 74.1 (2010).

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Borck, R. Adieu Rabenmutter—culture, fertility, female labour supply, the gender wage gap and childcare. J Popul Econ 27, 739–765 (2014). https://doi.org/10.1007/s00148-013-0499-z

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