Family allowances increase earnings inequality between households

Reconciliation policies reduce earnings inequality

6 January 2014

On 10 January Rense Nieuwenhuis will defend his doctoral thesis 'Family Policy Outcomes' at the University of Twente in the Netherlands. Nieuwenhuis carried out international research in the field of the participation of women in employment and earnings inequality between coupled households. His research reveals that government policy which focusses on providing families with financial support increases earnings inequality between coupled households. High family allowances have a negative impact on the participation of mothers in employment. This is in contrast with reconciliation policies like maternity leave and child care leave. This policy reduces earnings inequality between households, because women remain more active on the employment market. Nieuwenhuis is affiliated with the Institute for Innovation and Governance Studies of the University of Twente and the Swedish Institute for Social Research of the Stockholm University. 

Rense Nieuwenhuis carried out research into sixteen European countries, including Germany and Sweden, as well as the USA, Canada and Australia. He focussed on government policy in these countries, such as the duration of maternity and childcare leave, the size of family allowances and tax advantages for families. He also examined individual characteristics of women in more than 700,000 households: motherhood, age, level of education and whether or not they had a partner.

Motherhood-employment gap

The doctoral thesis reveals that financial support policies for families with children, like family allowance, lead to a lower participation of mothers in employment. This increases the difference between mothers and women without children. In this respect, Nieuwenhuis speaks of a larger motherhood-employment gap. It appeared that tax advantages for families with children have no effect on the participation of women in employment.

At the same time Nieuwenhuis saw how reconciliation policies (maternity and childcare leave, continued payment of salaries during leave) leads to mothers who are more active on the employment market. In other words: a smaller motherhood-employment gap. Nieuwenhuis does, however, place one marginal comment. Nieuwenhuis: "In countries with very long periods of childcare leave, the risk increases that mothers end up not being employment” 

Income inequalities

A government that encourages the participation of women in employment affects not only the income of those particular women. Nieuwenhuis: "In countries with high rates of women’s employment, the earnings inequality between coupled households is smaller compared to countries with low female labour force participation rates.” This also implies that low rates participation of women on the labour market are associated with higher levels of earnings inequality between coupled households.

Well-educated mothers

Nieuwenhuis also studied the effect of level of education on the participation of women in employment. Although women who have enjoyed a higher education are more likely to work, the motherhood-employment gap among them is larger than among women who are less well-educated. However, government policy that focuses on combining work with having a family was found to be more effective with well-educated mothers. They are relatively more likely to work than mothers who are less well-educated.   

Publication

For his doctoral degree, Nieuwenhuis published various articles together with Prof Dr Ariana Need and Dr Henk van der Kolk, both of whom are employed at the University of Twente. The article 'Institutional and Demographic Explanations of Women's Employment in 18 OECD Countries, 1975–1999' appeared in the June issue (2012) of the prestigious 'Journal of Marriage and Family'.

For more information and interview requests, please contact UT Science Information Officer Juliette Fhij (+31 (0)6 57939296).