Chapter

Chapter 10A. Chile

Editor(s):
Kalpana Kochhar, Sonali Jain-Chandra, and Monique Newiak
Published Date:
February 2017
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Author(s)
Lusine Lusinyan

The gender gap in the labor market remains relatively large in Chile despite the important progress made in adding women to the labor market: women currently comprise 40 percent of Chile’s labor force, up from less than one-third in 1990. But Chile’s female labor force participation, at 55 percent, remains below the average across both the member countries of the Organisation for Economic Co-operation and Development (OECD) and other countries in Latin America (Table 10.1). It is significantly lower than the participation rate for men (80 percent) and is particularly low among low-income households. Furthermore, there is a significant wage gap with men, with women earning 30–40 percent less for the same level of education, reflecting job characteristics (Sánchez 2014) but primarily gender discrimination (INE 2015).

Table 10.1.Gender Gaps and Childcare Support in Chile
ChileOECDLA-61
Female labor force participation rate255.362.660.8
Labor force participation gap324.317.023.5
Gender wage gap416.014.8..
Coverage of early childhood education517.632.6..
Public expenditure on childcare and preschool60.40.8..
Sources: Organisation for Economic Co-operation and Development; World Bank, World Development Indicators database; and IMF staff calculations.

LA-6 = Argentina, Brazil, Colombia, Mexico, Peru, and Uruguay.

Percent of female population ages 15–64.

Difference between male and female labor force participation rates.

Difference between median earnings of men and women in percent of median earnings of men.

Average enrollment rate of children under age three in formal childcare.

Percent of GDP.

A combination of several factors can help explain Chile’s gender gap:

  • Low coverage of childcare and early childhood education: Family responsibilities are cited as the main reason for inactivity by one-third of women.

  • Mandated provision of childcare services by firms with more than 20 female employees: This increases the relative cost of employing women and is shown to reduce starting wages of women by 10–20 percent (Prada, Rucci, and Urzúa 2015).

  • A strict approach to flexible working hours and poor-quality part-time work: Although part-time work is common, it is mostly informal (leading to lower wages and greater risk of poverty) and involuntary (Fagan and others 2014; Sánchez 2014).

  • Long commutes and high transportation costs: Transportation is constrained by limited connectivity (Chile lags the OECD average for kilometers of road by 60 percent), and transportation costs represent almost 10 percent of the net wage of a part-time worker in Santiago (6.5 percent for a full-time worker) (Rau Binder 2010; Fagan and others 2014).

  • Gender-based legal bias: Even with prevailing cultural norms in mind, women are economically less independent in terms of ability to access and use property, and Chile is one of the very few countries in the world where the husband has by default the right to administer the joint marital property (although opt-out clauses exist) (World Bank 2015).

Narrowing the gender gap would lead to important economic gains for Chile. A growing literature highlights that gender gaps in labor force participation, entrepreneurial activity, and education impede economic growth (Elborgh-Woytek and others 2013; Gonzales and others 2015). Teignier and Cuberes (2014) estimate that GDP losses due to economic gender gaps amount to 17 percent of GDP for Chile, compared with the average of 12 percent for Argentina, Brazil, Colombia, Mexico, Peru, and Uruguay (the LA-6). Looking at the labor force participation gap, we estimate that closing the current gap with the LA-6 (by increasing female participation by 1¼ percent a year during 2015–20) would result in a cumulative GDP gain of about 3 percent by 2020, relative to the baseline.

Reforms enacted in recent years are likely to make Chile’s labor market more inclusive. These reforms include the extension of early childhood education and childcare services (since 2006, Chile Crece Contigo); the introduction of employment bonuses for low-income women (in 2012, Ingreso Etico Familiar, expanded in the 2015 and 2016 budgets); the extension of maternity leave, with a possibility to share leave with fathers (in 2011); the training program Más Capaz, launched in 2015 with an objective to train 450,000 youth and women during 2015–18 and facilitate their entrance into the job market; and education reform (IMF 2015).

Even so, there is a need to broaden the recent reforms and increase their usage. It is too early to evaluate most of the recent policies, but the empirical evidence about the impact of past policies (particularly, greater childcare provision) on Chile’s female participation is mixed. Further efforts should focus on the following:

  • Extending early childhood education and childcare services. The administration is planning to open 4,500 new childcare institutions for children under age three by 2018, including through longer hours of care and out-of-school care services.

  • Removing the mandated employer-provided childcare (as currently considered).

  • Improving flexibility in hours of work and promoting a better transition to full-time, permanent jobs, including through strengthening workers’ rights to request changes in working hours and the possibility to “reverse” from part-time to full-time hours, as in other countries (for example, France, Germany, the Netherlands, and Poland), and more generally addressing labor market duality.

  • Investing in transportation infrastructure. The authorities nearly doubled the expenditure on transportation in 2015 relative to 2014, although this still represents a small fraction of the entire investment plan for the year.

  • Ensuring greater usage of policy measures, such as by making paternal leave nontransferable “take it or lose it” (as in Norway) and facilitating access to available subsidies for female workers.

  • Reducing occupational segregation by gender through education and job training policies that would contribute to improving gender equality in the labor market.

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