85% of Swedish mothers of pre-school children participate in the paid labour market, while the UK figure is only 28%. In Sweden the labour force participation rate of single mothers of pre-school children is slightly higher than that for married mothers. In the United Kingdom, in contrast, the percentage of single mothers in paid work is smaller than that of married mothers of pre-schoolers, despite the more pressing economic circumstances typically faced by single mothers. At a lunch- time meeting on 17 November, Siv Gustafsson described how Sweden's `family-friendly' employment and welfare policies, such as the subsidization of public childcare, significantly help mothers, especially single mothers, to combine family rearing with paid work.
Gustafsson is a Research Fellow in the Human Resources since 1900 programme. The research on which she based her talk is reported in CEPR Discussion Paper No. 279 (with Frank Stafford), `Daycare Subsidies and Labor Supply in Sweden'. She has been involved in a CEPR programme of Anglo-Swedish comparative research on `Family Formation and Employment Activity', with financial support from the Nuffield Foundation. Funding for Gustafsson's lunchtime meeting was provided by the Economic and Social Research Council, as part of its support for the Centre's dissemination programme.
In her research, Gustafsson analysed how the availability of subsidized childcare in Sweden influences mothers' decisions to work. This issue is of considerable relevance to public debate in the United Kingdom, she noted. As CEPR Programme Director John Ermisch had told an earlier lunchtime meeting, in a situation where the supply of male labour is shrinking due to shifts in the age structure of the workforce, it is important to encourage greater participation of young women in paid employment. Ermisch's estimates of the likely consequences of increased childcare provision on UK lone parents' labour force participation (see Bulletin No. 30/31) can only be tentative. The Swedish experience is an excellent opportunity to test the impact of childcare subsidies in practice.
On average, public daycare is available for 47% of Swedish children aged 0-6, with coverage increasing as the child approaches the school starting age of 7. This provision is financed by combinations of the nat ional budget, local government budgets and a parental fee. Virtually no childcare in Sweden is provided by employers, Gustafsson noted: the burden of provision falls on the 285 local government `communities', each covering a large rural area or a single city. Each community decides how many childcare places to make available, the extent of the subsidy, and thus the fee parents have to pay.
The contribution of the national budget is conditional on the quality of the service, in terms of child/adult ratios, room space per child and other criteria, ensuring that the quality of service is quite even across communities. Its price and availability to parents vary considerably, however, and this is what made it possible for Gustafsson to examine how these variations affected women's joint childbearing and labour force participation decisions. For example in 1984, for a family with a middling monthly income of 17,000 Skr (c. £1,545), the monthly parental fee for one pre-schooler in Stockholm was 685 Skr, whereas in nearby Uppsala it was 1,240 Skr. Moreover in some communities childcare spaces are severely rationed, while in others including Stockholm, where 65% of children under 7 are in public childcare, there is close to full coverage.
Childcare is less readily available in rural areas and small cities, and more so in communities governed by the Social Democrats and in those with a higher tax base, as one might expect. But cross-section analysis revealed one factor which had an even stronger effect on the availability of childcare, according to Gustafsson: the proportion of women among elected community officials. This lends further support to the view that women politicians have different priorities from men.
In her empirical work with Frank Stafford, Gustafsson had used `logit-choice' techniques to model how the price parents have to pay for childcare affected their joint decisions to work substantially in the labour market and to use public childcare. Data on household characteristics and choices were obtained from a representative national sample of Swedish households in 1984.
Taking all the data together, variations in the parental fee appeared to have little influence on the probability of substantial market work combined with the use of public daycare. But closer examination revealed that this was due to the rationing of childcare places in many communities. When the analysis was repeated so as to focus only on the 164 communities where childcare places did not appear to be rationed, lower parental fees did significantly affect the probability of working in the market and using public daycare.
The research also suggested that, so long as there is excess demand for public childcare, the extent to which the subsidized price is below the market-clearing price does not influence the total number of people who use public and private childcare provision. Other expected influences on this choice, confirmed by the analysis, included the net after-tax gain from the mother's full-time work. One interesting result was that the husband's or partner's income also had a positive effect, though smaller, on female labour force participation. In most countries, this relationship is negative.
In response to a question from the audience, Gustafsson said that, despite appearances of egalitarianism, gender segregation in the Swedish labour market remained a problem. Although women and men made approximately equal human capital investments, in education and work experience, women's hourly wages are still only 80% of men's. The relevant legislation only outlaws discrimination, and Gustafsson urged the adoption of positive action in the labour market.