This Selected Issues paper analyzes the conditions under which Italian banks can earn sufficient profits to grow out of their asset quality problems, rebuild capital buffers, and finance the real economy. A bottom-up analysis of the 15 largest Italian banks suggests that restoring sustainable profitability depends heavily on the growth outlook. Many banks are expected to become more profitable as the economy recovers, but their capacity to lend depends on the size of their capital buffers. However, a number of smaller banks face substantial profitability pressures, highlighting the need to reduce the large stock of nonperforming loans and for further cost cutting and efficiency gains.

Abstract

This Selected Issues paper analyzes the conditions under which Italian banks can earn sufficient profits to grow out of their asset quality problems, rebuild capital buffers, and finance the real economy. A bottom-up analysis of the 15 largest Italian banks suggests that restoring sustainable profitability depends heavily on the growth outlook. Many banks are expected to become more profitable as the economy recovers, but their capacity to lend depends on the size of their capital buffers. However, a number of smaller banks face substantial profitability pressures, highlighting the need to reduce the large stock of nonperforming loans and for further cost cutting and efficiency gains.

Female Labor Force Participation in Italy: Drivers and Benefits1

This paper examines the scope for increasing women’s role in the formal economy and the potential benefits of closing gender gaps in the Italian labor market. Low female labor force participation in Italy is not necessarily the result of unconstrained choice. Insights from existing studies and evidence from Italian provinces suggest a substantial role for policies, such as removing fiscal disincentives and enhancing the supply of child- and elderly-care services to support women’s decisions to enter the labor market. Having more women in the labor force paves the way for increased diversity in senior corporate positions, which may bring further economic benefits. New evidence from 300,000 firms in Italy suggests that the higher presence of women in senior corporate position is tied with stronger corporate profitability, particularly in sectors with larger shares of women in the labor force and with a higher demand for creativity and innovative capacity.

A. Introduction

1. Italy’s population is aging, and productivity growth has declined significantly. According to Eurostat forecasts, Italy will have more than 2 million (or 8 percent) fewer workers in 2040 relative to current levels. Without migration, the decline is expected to be significantly larger at more than 30 percent. This could have a sizable impact on Italy’s potential growth, which had fallen even prior to the Global Financial Crisis, reflecting a sharp drop in productivity growth. With output per worker rising a mere 3.5 percent since Italy’s adopted the euro in 1998, the prospects for labor productivity growth offsetting the decline in the number of workers in the future are not very bright.

Figure 1.
Figure 1.

Italy: Labor Force Projection: Select Countries

(population 25–54)

Citation: IMF Staff Country Reports 2016, 223; 10.5089/9781498355575.002.A002

2. Raising women’s involvement in the formal labor market could help mitigate these trends. Even though women in Italy are just as likely as men to receive secondary and tertiary education, their contribution to the formal economy is far below its potential. In 2014, only 76 women were working for every 100 men of prime working age. Moreover, working women supplied significantly fewer hours of work than men. In senior corporate positions, the gender gap is even more glaring. In a sample of more than 300,000 Italian firms across all sectors of the economy, only 23 percent of senior manager and corporate board positions were held by women in 2013. Closing gender gaps in the labor market could bring significant macroeconomic benefits by increasing labor supply and potentially improving firm performance.

3. This paper examines the scope for increasing women’s role in the formal economy and the potential benefits of closing gender gaps. After taking stock of the evolution of female labor supply, we focus on the role of policies in raising female employment, drawing on insights from existing analytical studies and evidence from Italian provinces. We then discuss the likely benefits of raising women’s involvement in the labor market through its effect on labor supply and possible improvement in firm financial performance. To shed light on the latter, we present new empirical evidence on women’s representation in senior corporate positions and financial performance across 300,000 firms in Italy.

B. Female Labor Force Participation in Italy

4. Italy has one of the lowest rates of female labor force participation in Europe. In 2014, only 66 percent of working age women (25–54) either had or were actively searching for a job, the second lowest rate in Europe after Malta (Figure 2, Panel 1). Moreover, compared to other European economies, progress in raising female labor force participation has been limited. While in most advanced economies female labor force participation rates are converging to those in Nordic countries (e.g., Spain, Netherlands, and Ireland), in Italy the process of convergence has been notably slower (Figure 2, Panel 2).

5. The low involvement of women in the labor force has given rise to a sizable gender gap in the labor market. In 2014, the difference between male and female participation rates was more than 20 percentage points, surpassed only by Malta. The participation gap widens with age, suggesting that few women return to the labor market even when their children leave home. The gender gap is also most pronounced among those with lower levels education, with women 34 percentage points less likely to be employed or looking for a job than men. Among the population with tertiary education, the gender gap is less than 8 percentage points.

6. Even when women participate in the labor market, they are often employed at less than full time. About one-third of female workers in Italy are employed part time. Consequently, they tend to work on average 33 hours per week, compared to 40 hours worked by men. The gender gap in working hours develops early in women’s careers and has a persistent impact over time for married women with children: while the average number of working hours by married women with no children remains broadly constant through their working life, for married mothers of two it almost halves when we compared the 40–44 cohort to the under 30 cohort.

Figure 2.
Figure 2.

Italy: Selected Female Labor Force Participation Indicators

Citation: IMF Staff Country Reports 2016, 223; 10.5089/9781498355575.002.A002

7. There is very large variation in women’s involvement in the labor market across Italian provinces. In the Northern part of the country, participation rates among women aged 15–64 are on par with the activity rate of women in Germany, United Kingdom and Austria at around 65–70 percent. There are certain provinces in the South, however, where less than 40 percent of women in that age group are working or actively looking for a job (Figure 3).

Figure 3.
Figure 3.

Italy: Female Labor Participation Rates Across Provinces

(Ages 15–64, Percent of Same-Age Population, 2014)

Citation: IMF Staff Country Reports 2016, 223; 10.5089/9781498355575.002.A002

Source: Istat.

C. Drivers of Women’s Participation in the Labor Market

8. Both individual characteristics and policies shape a woman’s decision to work. When making the decision to join the labor force, women compare the value of home production relative to the return from working outside the house (Becker, 1965). The return to household work typically increases with the number of children or elderly women care for, while higher education raises the potential earnings from joining the labor force. Gender attitudes and believes about women’s role in society are important drivers as women’s labor supply as they shape the disutility of working outside the house from violating personally held believes or social norms (Fernandez, 2013).2 However, recent analysis, which relies on detailed micro data to fully account for individual attitudes and choice, confirms that for European women, the decision to work is shaped to a significant extent by policies (Christiansen and others, 2016a).3 Specifically, tax policies can create strong disincentives against work.4 The provision of services that make it easier for women to combine a job with household and care responsibilities can support women’s choice to return to market work.

Taxation

9. In Italy’s case, removing fiscal disincentives for married women could strengthen women’s attachment to the labor force. At a quick glance, with its system of individual taxation, Italy does not stand out in an international context as having particularly strong disincentives for the second earner in the family to join the labor force. Italy’s tax benefit system favors dual-earner couples over single-earner couples to a greater extent than in other European countries (see OECD Family Database, Neutrality of Tax Benefit systems, and Figure 4). However, as emphasized by Colonna and Marcassa (2015), tax credits for dependent spouse and children and universal cash transfers for children increase the fiscal burden of low income households and the marginal tax rate of women married to low income or unemployed men. Estimating a structural model of female labor supply, Colonna and Marcassa (2015) demonstrate that moving (in a revenue neutral fashion) to a system of working tax credits (similar to the Earned Income Tax Credit in the United States and the British Working tax credit) combined with cash transfers that are independent of the total household income would raise the employment rate of married women by 1.5 percentage points.

Figure 4.
Figure 4.

Italy: Taxation

Citation: IMF Staff Country Reports 2016, 223; 10.5089/9781498355575.002.A002

10. Durable reductions in labor taxation could also bring more women into the labor force. The attractiveness of entering paid work for potential second earners does not merely depend on the incentives within the tax benefit system to share paid work within households, but also on the absolute financial gains second earners can make from being in work. And in that respect, Italy stands out in an international context. For a two-earner couple with two children, the average tax wedge stood at 42.4 percent in 2014, the third highest in Europe (Figure 4). Such high levels of taxation could be a significant deterrent for women’s labor force participation, in light of the greater female labor supply elasticity with respect to income (see Keane, 2011, for a review of the literature). Recent measures have reduced significantly the effective labor taxation for low income workers for the 2015–2018 period, though social security exemptions are temporary. To bring more women in the labor force, durable reduction in labor taxation may be needed.5

Childcare and Elderly Care Support

11. Access to affordable childcare is limited in Italy. Italy spends relatively little on family benefits, including childcare, relative to other countries in Europe, with 2011 public spending amounting to 2 percent of GDP, compared to an average of 2.8 for European economies (OECD, Social Expenditure Database). Enrollment rates in formal childcare are also low. In 2013, less than a quarter of Italian children aged 0–2 were enrolled in formal childcare (Figure 5).6 Some suggestive evidence that the low provision of such services may affect women’s labor supply can be gleaned from the large variation across provinces in Italy. Using data on activity rates and various measures of the provision of childcare in 2007 at the province level, we find strong correlation between the gender gap in labor force participation and the availability of childcare services (measured as spending on childcare services per capita, share of kids enrolled in childcare services, and the efficiency of childcare provision, as computed by Giordano and Tommasino (2013) (Table 1). This correlation persists even after controlling for some of the standard determinants of labor supply, such as the education gap between genders, marriage and fertility rates in the province, the overall level of development and the share of services in the regional economy. Higher spending on childcare seems to be associated with higher female labor force participation (i.e., lower gender participation gap) especially in regions where the demand for female labor is greater (proxied by the share of employment in the services sectors or knowledge intensive industries), suggesting that the observed correlation may not just reflect an equilibrium outcome but may signal a constraint for women’s labor supply.

Figure 5.
Figure 5.

Italy: Participation Rates in Formal Childcare, 2013

(Percent of 0-2 year old children)

Citation: IMF Staff Country Reports 2016, 223; 10.5089/9781498355575.002.A002

Source: OECD Family Database.

12. Improving access to affordable child- and elderly care is essential in supporting Italian women in the work force. Beyond the correlations at the provincial level discussed above, Carta and Rizzica (2015) provide compelling evidence that female labor force participation in Italy is highly sensitive to childcare costs.7 Using the sudden expansion in the availability of cheaper public childcare and discontinuities in the rules that determine access to pre-kindergarten, Carta and Rizzica (2015) demonstrate that increasing the provision of low cost childcare led to significant increases in the participation of Italian mothers in the labor market and female employment due to the decline in women’s reservation wage. These effects were particularly pronounced for married and less-educated women, categories among the most underrepresented in the labor force.

Table 1.

Italy: Gender Participation Gap and Childcare Availability: Evidence from Provinces

article image
Robust standard errors in parentheses*** p<0.01, ** p<0.05, * p<0.1Note: ISTAT, Giordano and Tommasino (2013) and IMF staff estimates. The gender participation gap is defined as the male activity rate (aged 15-64) minus female activity rate in the same age group. Public spending on childcare and number of children enrolled in childcare is in logs and is scaled by the population in the province. Efficiency of childcare spending is defined as in Giordano and Tommasino (2013). The data is from 2008. All regressions control for the average fertility rate, marriate rate and gender education gap in the province, as well as the regional GDP per capita and the share of employment in services.

Workplace Flexibility

13. In addition to childcare support, flexible working arrangements can also help parents reconcile work and care responsibilities (OECD, 2015). In Italy, about 40 percent of companies included in the European Company Survey report having family friendly workplace arrangements, namely, the possibility for workers to vary the start and end of their working hours and accumulate hours for days off (Figure 6). In that regard, the recently introduced provisions in the Jobs Act for improving work-life balance and enhancing the flexibility of the work place are a step in the right direction.

Figure 6.
Figure 6.

Italy: Incidence of Employer-Provided Flexible Working Time Arrangements, 2013

(Percent of companies that report providing the possibility to accumulate hours for days off (full or half days) and to vary the start and end of daily work)

Citation: IMF Staff Country Reports 2016, 223; 10.5089/9781498355575.002.A002

Sources: OECD Family Database, LMF 2.4, Family Friendly Work Place Practices.

D. Benefits of Raising Female Labor Force Participation

Labor Supply

14. Closing the gender participation gaps could significantly boost Italy’s labor supply. As an illustrative exercise, Christiansen and others (2016c) compute the increase in overall labor supply from raising women’s participation rates to be equal to those of men assuming population and unemployment rates, as well as male labor force participation rates remain constant. Closing the gender participation gap would increase Italy’s labor supply by 12 percent. The impact could be as large as 20 percent if the gap in hours worked were also eliminated (Figure 7). The resulting increase in Italy’s measured potential output from the higher labor inputs will be sizable.

Figure 7.
Figure 7.

Italy: Gains from Eliminating Gender Gap

Citation: IMF Staff Country Reports 2016, 223; 10.5089/9781498355575.002.A002

Improving Firm Performance

15. Strengthening the attachment of women to the labor force could help build the pipeline of women for senior corporate positions, which might bring additional benefits.8 Greater diversity in senior positions, including along gender lines, might improve corporate performance to the extent that it fosters complementarities in skills, generates knowledge spillovers, stimulates critical and creative thinking, makes the workplace more enjoyable or stimulates demand.9 Given well-documented differences in preferences and behavior along gender lines, important complementarities may also arise between the managerial style of men and women.10 Furthermore, with the rise of women in the labor force, increasing their representation in senior positions would mitigate demographic difference between managers and subordinates, which could enhance workers’ productivity (Giuliano and others, 2012).

16. Nevertheless, existing evidence on the impact of gender diversity on firm performance is inconclusive.11 Influential work by McKinsey (2007) and Catalyst (2007) documented a strong positive association between the representation of women on the boards of Fortune 500 companies and corporate performance. However, later studies, which plausibly identify the causal impact on firm performance of raising the share of women in corporate boards, have challenged this early evidence (see, for example, Ahern and Dittmar, 2012). Common to all studies is an important limitation: data availability typically constrains the analysis to publicly listed companies in individual countries. The resulting small sample sizes make it hard to detect a statistically significant effect of gender diversity, particularly if its magnitude is small. Evidence from Italy is also mixed. Across 80,000 manufacturing firms in 2004 and 2011, Castaglione and others (2014) find a positive correlation between the presence of female managers and firm labor productivity. Bianco and others (2012) on the other hand found no correlation between a firm’s Tobin’s Q and the gender diversity of the board in a sample of 262 firms listed on the Italian stock exchange. Finally, Flabbi and others (2014) using matched employer-employee panel data from about 850 manufacturing firms find a strong positive effect on the interaction between having a female CEO and the share of female workers in the firm on firm’s output per worker and TFP.

17. New empirical evidence suggests a strong positive association between firms’ financial performance and gender diversity in senior positions in Italy. Using a sample of more than 300,000 firms with at least two members in the senior management team or corporate board in Italy from the Bureau Van Dijk’s Orbis database, we compare financial outcomes of firms within narrowly defined sectors based on the gender diversity of the senior management team and the corporate board in 2013 (see Christiansen and others, 2016b, for a similar study across 34 European economies).12 Specifically, we estimate the following regression model:

yin=β*sh_wmnin+γ*xin+αn+εin(1)

Where yin is the return on assets (ROA) of firm i, in industry n (measured as net income over total assets, profits before taxes over total assets and earnings before interest and taxes over total assets); sh_wmnin is the share of total members of senior management or the company board who are women; xin are firm specific controls (indicators for the size of the firm, firm age, the number of directors/senior managers, and tangible assets); αn denotes the full set of roughly 700 industry fixed effects. Across all measures, higher share of women in the decision-making team is associated with better financial performance (Table 2). Given the average size of the senior team and the average share of women in it, the correlations imply that exchanging just one male member with a woman would be associated with a 10–14 basis points higher ROA.

18. Greater female representation could shape firm performance through two channels. Since firm performance and gender composition of its board and senior management are jointly determined, it is difficult to give a causal interpretation to the positive association uncovered.13 To shed light on the underlying mechanisms, we use a simple difference-in-difference strategy inspired by the Rajan and Zingales (1998) approach. Our identifying assumption is as follows: if women in senior positions can help improve firm performance, their impact must be stronger in industries with:

  • More women in the labor force. Certain industries are significantly more likely to employ women (an assumption that is standard in theories of gender and the labor market and is well documented in the data).14 It is reasonable to expect that these industries may benefit more from gender diversity in senior positions. Women in leadership positions may be more likely to support family-friendly changes in corporate policies or serve as role models for other women, thereby raising the productivity of female workers. Women managers may also be better able to match female workers to tasks in the firms, as demonstrated by Flabbi and others (2014) in the case of Italy. Women’s leadership style could be more effective in female-dominated or female-oriented settings (Eagly and others, 1995).

  • Greater demand for creativity and critical thinking. A sizable literature has argued that the benefits of workforce diversity depend on sectoral characteristics.15 Extending the arguments of this literature to diversity in senior positions, it follows that sectors characterized by complex tasks and innovative output - such as high-tech manufacturing and knowledge-intensive services industries - stand to benefit more from greater diversity to the extent that such diversity increases the set of ideas and potential solutions.

19. We find evidence of both of these channels at work. As a first pass, we simply examine whether the role of women in senior positions in shaping corporate financial outcomes varies across different sectors. Estimating equation (1) for four broad economic sectors reveals that the positive association between the share of women and ROAs is significantly stronger for firms in the services sectors (Table 3), where an additional woman in a senior position, keeping the size of the board unchanged, is associated with a 23 bps higher ROA. In manufacturing, an additional woman is associated with only 6–9 bps higher ROA, while in the trade and construction sectors the estimated coefficients are even smaller and not statistically different from zero.

20. To examine more rigorously our hypotheses, we estimate the following equation:

yin=δ*SECn*sh_wmnin+β*shwmnin+γ*xin+αn+εin(2)

Where SECn is alternatively (i) the female intensity of the sector to which the firm belongs, and (ii) an indicator for whether the sector is a high-technology of knowledge-intensive sector.16 Table 4 presents the main findings from this exercise. For both the female intensity and knowledge-intensity, we find a positive and statistically significant coefficients on the interaction with the share of women in senior positions. For a firm operating in a sector with female intensity at the 75th percentile of the distribution (where women comprise about 52 percent of the workforce), the expected boost to ROA if a man were to be replaced by a woman in the senior team is estimated to be about 20 bps. In sector at the 25th percentile of the distribution of female intensity (where women comprise just a quarter of the labor force, the boost to ROA would be less than 1 bps.17 Similarly, an additional woman in a senior position is associated with a 30 bps higher ROA in a high-tech manufacturing sector or a knowledge-intensive services industry, while in the remaining sectors, the boost to ROA is only 4 bps and not statistically distinguishable from zero.

Table 2.

Italy: Share of Women in Senior Positions and Firm Financial Performance

article image
Note: All regressions include industry fixed effects, indicators for firm size, firm age, and control for the log of firm’s fixed assets and number of senior positions. Robust standard errors are clustered at the industry level.

Sample includes all firms with at least two, three or four members in senior positions in columns (1)-(3), (4)-(6) and (7)-(9) respectively.

Table 3.

Italy: Share of Women in Senior Positions and Firm Financial Performance: Sectoral Differences

article image
Note: All regressions include industry fixed effects, indicators for firm size, firm age, and control for the log of firm’s fixed assets and number of senior positions. Robust standard errors are clustered at the industry level.
Table 4.

Italy: Share of Women in Senior Positions and Firm Financial Performance: Role of Female- and Knowledge-Intensity

article image
Note: All regressions include industry fixed effects, indicators for firm size, firm age, and control for the log of firm’s fixed assets and number of senior positions. Robust standard errors are clustered at the industry level.

21. It is important to emphasize that these findings are sensitive to the measure of firm performance used. As in the broader European sample, the results are robust to various empirical modifications. Results are robust to various treatments of outliers, and to using alternative years for the firm financial data. However, unlike in the broader European sample of firms as reported in Christiansen and others (2016b), we do not find the same pattern if we focus on labor productivity (defined as output per worker) as an alternative measure of firms’ performance. While this may appear at odds with the findings on financial performance, it may simply reflect the different choices made by female managers. For example, using the introduction of gender quotas in Norway, Matsa and Miller (2013) find that firms affected by the quota undertake fewer workforce reductions than comparison firms, increasing relative labor costs and employment levels. Similarly, during the Great Recession, Matsa and Miller (2014) discover that female-led private firms in the United States were significantly less likely to downsize their workforce. As such, our findings are consistent with the existing evidence associating female business leadership with increased labor hoarding. However, we also document that this management style does not come at the expense of lower profitability.

E. Conclusion

22. The contribution of women to the formal Italian economy is far below its potential.

Female labor force participation has been increasing steadily over the past three decades. However, it remains very low relative to other advanced economies, and relative to participation rates of men. With only 67 percent of prime-aged women currently working or actively looking for a job, Italy has significant scope to expand its labor supply and lessen the economic impact of the downward demographic pressures it is set to experience in the future.

23. For Italy’s women, low labor force participation is not necessarily the result of unconstrained choice. While social norms and individual preferences are undoubtedly important factors in women’s decision to join the labor force, there is ample evidence that policies can relax some of the unique constraints faced by women. As demonstrated by Colonna and Marcassa (2015), reducing fiscal disincentives for women to join the labor force through a revenue neutral reform of the existing system of tax credits for dependent children and spouse and universal cash transfer could help bring more women into the workforce. Reducing durably Italy’s very high labor tax wedge should also disproportionately incentivize women to opt for market work, due to their higher elasticity of labor supply with respect to income. Finally, the dramatic regional disparities in female labor force participation suggest that changes in taxation only may have limited effect, if not accompanied by an increase in the availability of high-quality and affordable childcare and elderly care services. Greater flexibility in work arrangement could also help women combine job and household responsibilities.

24. In addition to removing fiscal disincentives and strengthening the provision of complementary services, reducing structural rigidities in product and services markets could facilitate women’s entry into the labor force. As demonstrated in Bassanini and Duval (2006), excessive regulation tends to restrict the supply and drive up the prices of services such as childcare and household services. Restricted opening hours of shops, for example, could make it difficult for women to reconcile work and family life. Also, by hindering the growth of the service sector, excessive regulation may limit the creation of employment opportunities for women. More generally, female employment would benefit from structural reforms (such as product market deregulation, cleaning up bank balance sheets, insolvency and judicial reform) that facilitate reallocation of resources and ultimately raise demand for labor.

25. More women in the labor force could lead to greater gender diversity in senior corporate positions, which may have further economic benefits. New evidence from more than 300,000 listed and unlisted companies in Italy suggests that the higher presence of women in senior executive positions and in companies’ boards is tied with stronger corporate profitability. This positive association is particularly pronounced in industries that employ more women and in industries with greater demand for the creativity and critical thinking that diversity in general may bring. To the extent that higher representation of women in senior positions improves corporate sector profitability, it would help support corporate investment and productivity, mitigating the slowdown in potential growth.

References

  • Ahern, K. and A. Dittmar, 2012, “The Changing of the Boards: The Impact on Firm Valuation of Mandated Female Board Representation,Quarterly Journal of Economics, Vol. 127, pp. 137197.

    • Crossref
    • Search Google Scholar
    • Export Citation
  • Akgunduz, Yusuf and Janneke Plantenga, 2011, “Child Care Prices and Female Labour Force Participation: A Meta-Analysis,Tjalling C. Koopmans Research Institute, Discussion Paper Series 11-08 (The Netherlands: Utrecht School of Economics).

    • Search Google Scholar
    • Export Citation
  • Alesina, A., Giuliano, P., and N. Nunn, 2013, “On the Origins of Gender Roles: Women and the Plough,Quarterly Journal of Economics, Vol. 128, No. 2, pp. 469530.

    • Crossref
    • Search Google Scholar
    • Export Citation
  • Bassanini, A. and R. Duval, 2006, “Employment Patterns in OECD Countries: Reassessing the Role of Policies and Institutions,OECD Economic Department Working Papers No. 486 (Paris: Organization for Economic Cooperation and Development).

    • Search Google Scholar
    • Export Citation
  • Becker, G., 1965, “A Theory of the Allocation of Time,The Economic Journal, Vol. 75, No. 299, pp. 493517.

  • Bianco, M., A. Ciavarella and R. Signoretti, 2011, “Women on Boards in Italy,CONSOB Working Paper 70 (Rome: Consob).

  • Bick, A. and N. Fuchs-Schündeln, 2014, “Taxation and Labor Supply of Married Couples across Countries: A Macroeconomic Analysis,CEPR Discussion Papers No. 9115 (London: CEPR).

    • Search Google Scholar
    • Export Citation
  • Black, S. and C. Juhn, 2000, “The Rise of Female Professionals: Women’s Response to Rising Skill Demand,American Economic Review, Vol. 90, pp. 450455.

    • Crossref
    • Search Google Scholar
    • Export Citation
  • Blau, D. and P. Robins, 1988, “Child-Care Costs and Family Labor Supply,The Review of Economics and Statistics, Vol. 70, No. 3, pp. 374381.

  • Bratti, M., E. Del Bono and D. Vuri, 2005, “New Mothers’ Labour Force Participation in Italy: the Role of Job Characteristics,Labour, Vol. 19, No. s1, pp. 79121.

    • Crossref
    • Search Google Scholar
    • Export Citation
  • Bratti, M. and S. Staffolani, 2012, “A Microeconometric Analysis of Female Labour Force Participation in Italy,Chapter 2 in Non-Standard Employment and Quality of Work, ed. by T. Addabbo and G. Solinas (Berlin, Heidelberg).

    • Crossref
    • Search Google Scholar
    • Export Citation
  • Carta, F., and L. Rizzica, 2015, “Female Employment and Pre-Kindergarten: on the Unintended Effects of an Italian Reform,Bank of Italy Working Papers Series No. 1030 (Rome).

    • Search Google Scholar
    • Export Citation
  • Castaglione, Concetta, Davide Infante and Janna Smirnova, 2014, “Do Female Managers Affect Productivity? Evidence from Italian Manufacturing Firmsunpublished manuscript.

    • Search Google Scholar
    • Export Citation
  • Catalyst, 2007, The Bottom Line: Corporate Performance and Women’s Representation on Boards.

  • Chiuri, M. 2000, “Quality and Demand of Child Care and Female Labour Supply in Italy,Labour, Vol. 14, No. 1, pp. 97118.

  • Colonna, F., and S. Marcassa, 2015, “Taxation and Female Labor supply in Italy,IZA Journal of Labor Policy, Vol. 4, No. 1, pp. 129.

  • Committee for Economic Development, 2012, “Fulfilling the Promise: How More Women on Corporate Boards Would Make America and American Companies More Competitive” (Washington).

    • Search Google Scholar
    • Export Citation
  • Center for Advanced Human Resource Studies, 2011, “Re-Examining the Female Path to Leadership Positions in Business” (Cornell University).

    • Search Google Scholar
    • Export Citation
  • Christiansen, L., H. Lin, J. Pereira, P. Topalova, and R. Turk, 2016a, “Individual Choice or Policies? Drivers of Female Employment in Europe,IMF Working Paper 16/49 (Washington: International Monetary Fund).

    • Crossref
    • Search Google Scholar
    • Export Citation
  • Christiansen, L., H. Lin, J. Pereira, P. Topalova, and R. Turk, 2016b, “Gender Diversity and Firm Performance: Evidence from Europe,IMF Working Paper 16/50 (Washington: International Monetary Fund).

    • Crossref
    • Search Google Scholar
    • Export Citation
  • Christiansen, L., H. Lin, J. Pereira, P. Topalova, and R. Turk, 2016c, “Unlocking Female Employment Potential in Europe: Drivers and BenefitsIMF Departmental Paper Series (Washington: International Monetary Fund). http://www.imf.org/external/pubs/ft/dp/2016/eur1601.pdf

    • Search Google Scholar
    • Export Citation
  • Croson, R. and U. Gneezy, 2009, “Gender Differences in Preferences,Journal of Economic Literature, Vol. 47, No. 2, pp. 448474.

  • Del Boca, D., 2002, “The Effect of Child Care and Part Time Opportunities on Participation and Fertility Decisions in Italy,Journal of Population Economics, Vol. 15, No. 3, pp. 549573.

    • Crossref
    • Search Google Scholar
    • Export Citation
  • Do, Q., A. A. Levchenko, and C. Raddatz, 2016, “Comparative Advantage, International Trade, and Fertility,Journal of Development Economics, Vol. 119, pp. 4866.

    • Crossref
    • Search Google Scholar
    • Export Citation
  • Eagly, A. H., Karau, S. J., and M. G. Makhijani, 1995, “Gender and the Effectiveness of Leaders: A Meta-Analysis,Psychological Bulletin, Vol. 117, pp. 125145.

    • Crossref
    • Search Google Scholar
    • Export Citation
  • EurWork, 2012, “Workers Hampered by Limited Welfare Regime,European Observatory of Working Life. http://www.eurofound.europa.eu/observatories/eurwork/articles/working-conditions/workers-hampered-by-limited-welfare-regime

    • Search Google Scholar
    • Export Citation
  • Fernandez, R., 2013, “Cultural Change as Learning: The Evolution of Female Labor Force Participation over a Century,American Economic Review, Vol. 103, pp. 472500.

    • Crossref
    • Search Google Scholar
    • Export Citation
  • Flabbi, L., M. Macis, A. Moro and F. Schivardi, 2014, “Do Female Executives Make a Difference? The Impact of Female Leadership on Gender Gaps and Firm Performance,CEPR Discussion Paper No. 10228 (London: CEPR).

    • Search Google Scholar
    • Export Citation
  • Galor, O. and D. Weil, 1996, “The Gender Gap, Fertility, and Growth,American Economic Review, Vol. 86, No. 3, pp. 374387.

  • Garnero, A., S. Kampelmann and F. Rycx, 2014, "The Heterogeneous Effects of Workforce Diversity on Productivity, Wages, and Profits," Industrial Relations: A Journal of Economy and Society, Vol. 53, No. 3, pp. 430477.

    • Search Google Scholar
    • Export Citation
  • Giordano, R. and P. Tommasino, 2013, “Public Sector Efficiency and Political Culture,FinanzArchiv, Vol. 69, No. 3, pp. 256288.

  • Jaumotte, F., 2003, “Female Labor Force Participation: Past Trends and Main Determinants in OECD Countries,OECD Working Paper (2003)30 (Paris: Organization for Economic Cooperation and Development).

    • Search Google Scholar
    • Export Citation
  • Jehn, K., G. Northcraft and M. Neale, 1999, “Why Differences Make a Difference: A Field Study of Diversity, Conflict and Performance in Workgroups,Administrative Science Quarterly, Vol. 44, No. 4, pp. 741763.

    • Crossref
    • Search Google Scholar
    • Export Citation
  • Keane, Michael, 2011, “Labor Supply and Taxes: A Survey,Journal of Economic Literature, Vol. 49, pp. 9611075.

  • Lee, C. and J. L. Farh, 2004, “Joint Effects of Group Efficacy and Gender Diversity on Group Cohesion and Performance,Applied Psychology, Vol. 53, No. 1, pp. 136154.

    • Crossref
    • Search Google Scholar
    • Export Citation
  • Marenzi, A. and L. Pagani, 2005, “The impact of elderly parents on labour market participation of Italian women,Rivista di Politica Economica, Vol. 95, No. 3–4, pp. 155189.

    • Search Google Scholar
    • Export Citation
  • Matsa, D. and A. Miller, 2013, “A Female Style in Corporate Leadership? Evidence from Quotas,American Economic Journal: Applied Economics, Vol. 5, No. 3, pp. 136169.

    • Search Google Scholar
    • Export Citation
  • Matsa, D. and A. Miller. 2014, "Workforce Reductions at Women-Owned Businesses in the United States," Industrial and Labor Relations Review, Vol. 67, No. 2, pp. 42252.

    • Crossref
    • Search Google Scholar
    • Export Citation
  • McKinsey & Company, Inc., 2007, “Women Matter: Gender Diversity, A Corporate Performance Driver.

  • McKinsey & Company, Inc., 2009, “Women Matter 3: Women Leaders, A Competitive Edge in and after the Crisis. Results of a Global Survey of Almost 800 Business Leaders.

    • Search Google Scholar
    • Export Citation
  • Organization for Economic Cooperation and Development, 2012, “Closing the Gender Gap: Act Now,” (Paris).

  • Parliamentary Budget Office, 2014, 2015 Budgetary Policy Report (November).

  • Prat, A., 2002, “Should a Team be Homogeneous?European Economic Review, Vol. 46, No. 7, pp. 11871207.

  • Rhode, D., and Packel, A., 2014, “Diversity on Corporate Boards: How Much Difference Does Difference Make?Delaware Journal of Corporate Law, Vol. 39, pp. 377426.

    • Search Google Scholar
    • Export Citation
  • Marino, M. R., Romanelli, M., and M. Tasso,Women at Work: The Impact of Welfare and Fiscal Policies in a Dynamic Labor Supply Model,Banca d’Italia, Temi di Discussione (Working Papers), Forthcoming.

    • Search Google Scholar
    • Export Citation
  • Thévenon, O., 2013, “Drivers of Female Labour Force Participation in the OECD,OECD Social, Employment and Migration Working Papers No. 145 (Paris: Organization for Economic Cooperation and Development).

    • Search Google Scholar
    • Export Citation
1

Prepared by Petia Topalova.

2

Social norms influence to a great extent female labor force participation in Italy, due to women’s traditional role as primary care providers for children and older members of the family (OECD, 2015; Colonna and Marcassa, 2015).

3

For cross country evidence on the determinants of female labor force participation, see also Jaumotte, 2003; Thévenon, 2013; Duval and Bassanini, 2005; and Bick and Fuchs-Schündeln, 2014, among others.

4

See Marino and others, 2016 for details.

5

The Parliamentary Budget Office (PBO) estimates that the 80 Euro bonus for low income workers, changes to IRAP rates and the temporary social security exemption for new hires under open-ended contracts have reduced the tax wedge from 48 percent to 33.4 percent for women employed at the average wage, and from 44 to 20.6 percent for women earning two-thirds of the average wage (Parliamentary Budget Office, 2014). The 2016 Stability law introduced a less generous temporary social security contributions cut for newly-hired workers in 2016, which should raise the tax wedge relative to PBO’s calculations.

6

According to a special survey on Conciliation between work and family in 2010 by ISTAT, excessive cost and lack of available childcare services were the main reasons given by respondents with care duties for why they do not provide more labor (EurWork, 2012).

8

Christiansen and others (2016b) uncover a strong positive correlation between the share of women employed full time and the presence of women in senior corporate positions across European countries. This pattern suggests that one of the potential causes for the persistent gender gaps in senior positions may be the limited supply of women willing and/or able to take such positions.

9

Female managers could be better positioned to serve consumer markets dominated by women (CED 2012; CAHRS 2011). Greater gender diversity would increase the heterogeneity in values, believes and attitudes, which would broaden the range of perspectives (OECD, 2012) and stimulate critical thinking (Lee and Farh, 2004).

10

See Croson and Gneezy (2009) for a review of the literature on gender differences in preferences and other factors that might affect managerial style. McKinsey (2007, 2009) argue that certain leadership behaviors were seen more often in women than men, namely, people-development, setting expectations and rewards, providing role models, and participative decision-making.

11

See Rhode and Packel (2014) for a survey of the literature on the gender composition of boards and financial performance.

12

We focus on the sample of firms that report having at least two members in the senior management/board since we are interested in examining the role of gender diversity in senior positions, rather than documenting differences in male vs female entrepreneurs. Economic theory provides some clear channels through which gender diversity may benefit firms which do not extend to single-manager firms.

13

The Orbis database does not provide consistent information on changes in the board or management team over time, which precludes us from examining how an increase in the prevalence of women correlates with changes in firm performance. In the cross section, the share of women in management may be correlated with numerous unobserved characteristics of the firm, which affect its financial performance. It is also difficult to distinguish whether greater presence of women improves firm performance or better performing firms are simply able to attract more women.

15

Prat (2002) and Jehn and others (1999) examine the role of sectoral characteristics, such as the complexity of tasks, in shaping optimal labor diversity. Garnero and others (2014) provide empirical evidence on the heterogeneous effects of workforce diversity across sectors in Belgium.

16

Female intensity is measured as the share of female workers in total employment across 61 distinct ISIC Rev. 3 manufacturing sectors using UNIDO Industrial Statistics Database averaged over all countries and years for which such data are available. OECD annual labor force employment statistics are used to construct female intensity of the remaining non-manufacturing sectors. We use Eurostat’s taxonomy of high- and medium-technology manufacturing sectors and knowledge-intensive services at the NACE 3-digit level.

17

These findings are similar to Flabbi and others (2014).

Italy: Selected Issues
Author: International Monetary Fund. European Dept.
  • View in gallery

    Italy: Labor Force Projection: Select Countries

    (population 25–54)

  • View in gallery

    Italy: Selected Female Labor Force Participation Indicators

  • View in gallery

    Italy: Female Labor Participation Rates Across Provinces

    (Ages 15–64, Percent of Same-Age Population, 2014)

  • View in gallery

    Italy: Taxation

  • View in gallery

    Italy: Participation Rates in Formal Childcare, 2013

    (Percent of 0-2 year old children)

  • View in gallery

    Italy: Incidence of Employer-Provided Flexible Working Time Arrangements, 2013

    (Percent of companies that report providing the possibility to accumulate hours for days off (full or half days) and to vary the start and end of daily work)

  • View in gallery

    Italy: Gains from Eliminating Gender Gap