Abstract
Although employment growth is propagated as being crucial to reduce poverty across EU and OECD countries, the actual impact of employment growth on poverty rates is still unclear. This study presents novel estimates of the association between macro-level trends in women’s employment and trends in poverty, across 15 OECD countries from 1971 to 2013. It does so based on over 2 million household-level observations from the LIS Database, using Kitagawa–Blinder–Oaxaca (KBO) decompositions. The results indicate that an increase of 10% points in women’s employment rate was associated with a reduction of about 1% point of poverty across these countries. In part, this reduction compensated for developments in men’s employment that were associated with higher poverty. However, in the Nordic countries no such poverty association was found, as in these countries women’s employment rates were very high and stable throughout the observation period. In countries that initially showed marked increases in women’s employment, such as the Netherlands, Germany, Spain, Canada, and the United States, the initial increases in women’s employment rates were typically followed by a period in which these trends levelled off. Hence, our findings first and foremost suggest that improving gender equality in employment is associated with lower poverty risks. Yet, the results also suggest that the potential of following an employment strategy to (further) reduce poverty in OECD countries has, to a large extent, been depleted.
Highlights
Employment growth is regarded to be one of the most important ways to reduce poverty
In the European Union this is for instance reflected in the ‘Social Investment’ perspective on policy making, which emphasises government expenditures on policies that allow people to ‘prepare’ themselves for economic independence through employment, rather than ‘repair’ poverty through benefit expenditure (Morel et al 2012)
We focus on the association between the marked rise in women’s employment across OECD countries and trends in relative income poverty in recent decades
Summary
Employment growth is regarded to be one of the most important ways to reduce poverty. The social investment perspective is clearly visible in the EU 2020 Growth Strategy, which is the steering wheel for European social and economic integration for the period 2010–2020. In this Growth Strategy, EU countries are supposed to raise employment rates from 69 to 75% and to reduce poverty by 25% (Cantillon and Vandenbroucke 2014). Despite a nearly continuous dynamic of economic growth, increasing employment rates, and high levels of social spending in the period before the Great Recession, poverty rates for working-age people and for children either rose or stayed stable, with few countries reporting a significant fall (Burniaux et al 1998; Fritzell and Ritakallio 2010; OECD 2008). Even the feted Scandinavian model has generally been unable to counter this trend: poverty increased significantly in Finland (as well as in Sweden, in more recent years) (Morelli et al 2015)
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