An astonishingly wrong-headed story about female employment, the economy, and fertility appears in today’s CanWest newspapers.  The reporter argues that encouraging women to enter the paid workforce is a “magic bullet” that will not only improve the financial situation of the women and their families but also generate an array of social benefits, including a much-needed increase in fertility.

There may be a magic bullet for solving some of our society's most difficult problems, such as a lack of affordable housing, immigration, productivity declines, an aging workforce or the near-crippling demands on the pension system.

Make it easier for women to get into the paid workforce.

Here's the magic. Not only would that increase family incomes, making homes more attainable, it's been shown to boost gross domestic product and decrease dependency on imported labour.

And, perhaps surprisingly, it almost certainly would increase the number of Canadian-born babies.

Many economic studies dating back at least to the 1970s have found a positive correlation between female labour force participation rates and the price of housing.  That is to say, getting women into the labour force does not “mak[e] homes more attainable”.

A moment’s reflection on the law of supply and demand should have made that clear.  Because the supply of suitable and desirable land for housing is relatively fixed, increasing income will drive up the price of such land and, therewith, housing.  (In technical terms, the supply of land for housing is inelastic.)  Even a cursory look at housing prices over the past fifty years will bear that out.

The claim that increasing female employment will cause an increase in fertility is said to be based on a 2004 study by the investment banking firm Goldman Sachs that focused on the European Union, the United States, and Japan.

Higher female employment results in a lower birth rate, right? Nonsense, says Goldman Sachs.

"This claim is simply contradicted by the facts. Fertility is positively correlated with high female employment."

More simply, countries with the best child-care policies not only have a higher proportion of women in the workforce, they also have higher fertility rates. Conversely, Italy and Japan, with the lowest levels of female employment, have the fewest babies.

Based on that information, the Goldman Sachs study appears to be based solely on cross-sectional analysis: Data from several countries at a single point in time were analysed.  A historical time-series analysis would have generated far different results.  Look at this chart showing fertility rates in Canada and the US for the period 1940-1999.

Fertility Rates, Canada and the US

Female labor force participation rates rose more or less steadily during that time period, but look at what happened to fertility.  It went down—big-time.  In the 1990s, fertility in the US recovered to replacement level, but not in Canada, despite ongoing increases in female labour force participation and employment rates.

The claim that getting women into the paid labour force will result in increased fertility is based on a myopic and misleading analysis.

So, if the women are all out working, who will look after all those phantom babies?  Need you ask?

The report notes the inadequate supply of good-quality, affordable child care as the chief impediment to women taking full-time paid employment, followed by inadequate parental leave provisions.

Governments providing child-care subsidies conditional on employment, the report says, have been shown to consistently and significantly boost the number of women who work.

Daycare has been studied to death in recent years, and the verdict is in.  Daycare is bad for children and bad for parents.  If at all possible, parents should not pay strangers to care for their children, and the state should certainly not subsidise such arrangements.

h/t: ProWoman, ProLife

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