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Contents | Executive summary | How to obtain this publication | Additional info
The following OECD assessment and recommendations summarise chapter 5 of the Economic survey of Chile, published on 26 November 2007.
Contents
Raising female labour force participation should be a priority
By fostering labour force participation among the groups that are lagging behind, such as females, policy can contribute to raising the economy’s long term growth potential, and reducing poverty and income inequality. Although female labour force participation has risen steadily since 1990, there remains a sizeable gender gap in labour supply. The effective gender gap is higher still when part time work is taken into account, as it tends to be more prevalent among women. There are cultural reasons why women may prefer to focus on household responsibilities, which appear to be particularly strong in Chile, rather than to engage in gainful activities outside the home. But there is scope for policy action in this area. Recent initiatives, such as the implementation of full day schooling in municipal and subsidised private schools, which started in 1997, and the extension of compulsory schooling to lower secondary education in 2003 should encourage female participation. This is because the empirical evidence provided in this Survey on the basis of household survey data suggests that the presence of young children in the household is a powerful impediment to labour supply among prime age females. Policy options for encouraging more flexible arrangements in the allocation of working time would provide an alternative for mothers with young children to reconcile household and work responsibilities. This is important, because the prevalence of part time work among females is below the OECD area average. In this regard, the recommendation made to clarify regulations so that working time can be reduced by any number of hours, and not necessarily by as much as one third, would go in the direction of fostering female participation, in addition to encouraging labour formalisation, as noted above.
Labour force participation by age and gender, 1990-2003
In per cent
Source: MIDEPLAN (CASEN database) and OECD calculations.
An increase in the availability of affordable child care may also encourage participation among other household members
Mothers with younger children, especially those in low pay jobs, are discouraged from working outside the home when they have to pay for child care out of pocket. The supply of publicly funded care for young children has increased significantly over the years, but there is considerable pent up demand for these services. Of course, the net economic benefit of reducing the costs of child care borne by parents depends ultimately on the labour supply response. Indeed, the payoff from policy action in this area could go far beyond the increase in participation among prime age females, because it would unlock opportunities for other household members to engage in gainful occupations outside the home. This is the case of the elderly, for example, whose labour supply is discouraged by the presence of young children in the household. Older household members can be relied upon for child care through informal intra household arrangements. This is also the case of female youths, whose participation is discouraged by the presence of young children in the household, which suggests that they too contribute to informal child care. The fact that such informal arrangements are likely to change when the younger cohorts, who have higher participation rates, grow older also needs to be taken into account. Therefore, public finances permitting and taking into account the varying labour-supply responses, measures could be considered for further facilitating access to child care so as to encourage female labour supply.
There are options for reconciling youth labour force participation with rising educational attainment
The proposed social security reform also aims at encouraging participation among youths. There is considerable scope for policy action in this area, because youth participation is not only low in Chile in comparison with the OECD average, but it is also trending down, especially for males, while remaining fairly low and stable over the years for young females. The authorities envisage the introduction of a sizeable pension contribution subsidy for individuals aged 18-35 earning less than 1.5 times the minimum wage on their first jobs – that is, probably those with low educational attainment – as a means of making paid employment attractive to these individuals. By making the hiring of youths more attractive, the subsidy programme would also contribute to removing financial constraints on human capital accumulation and encourage those youngsters who are not studying nor working to engage in some sort of paid occupation that may enhance their earnings capacity in the future. The share of youths who are neither studying nor working is coming down, but it remains comparatively high for females. Empirical evidence shows that educational attainment is one of the most powerful determinants of participation, for both men and women. Therefore, policies that foster human capital accumulation for the population as a whole should be given priority, because they would contribute to reducing the remaining gender gap in labour supply and employment.
How to obtain this publication
The Policy Brief (pdf format) can be downloaded in English or in Spanish. It contains the OECD assessment and recommendations.The complete edition of the Economic survey of Chile 2007 is available from:
- SourceOECD for subscribing institutions and many libraries
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OLISnet, under "Publication Locator", for government officials with accounts ( subscribe)
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Additional information
For further information please contact the Chile Desk at the OECD Economics Department at eco.survey@oecd.org. The OECD Secretariat's report was prepared by Luiz de Mello and Diego Moccero under the supervision of Peter Jarrett. Research assistance was provided by Anne Legendre.
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