5 Conclusions
New Zealand workforce and family trends appear to be similar to those in other OECD countries. Women are becoming more involved in the workforce, leading to an erosion of the traditional male breadwinner household. A discussion of workforce trends such as these is typically followed by calls for government intervention to promote work-family balance, with no analysis of the grounds for such intervention or the efficacy of the policies. This paper is motivated by a need to consider government intervention within an economic framework that examines its rationale, objectives and efficacy.
An economic approach involves the idea that people have stable, well defined preferences and that they make rational choices consistent with those preferences in markets that clear. It can also be applied to non-market behaviour, such as marriage and fertility. The economic view of the household is that the decisions individuals make about work and family are influenced by the costs and benefits involved in each. Changes in the relative costs and benefits will change the payoff to working at home or in the market. A rise in market wages, for example, will raise the opportunity cost of bearing and raising children. This factor explains not only the increase in the labour force participation of married women, but also falls in fertility and rises in the divorce rate. The economic approach acknowledges that there are intrinsic differences between men and women, principally arising from the women’s role in bearing children that lead to differences in comparative advantage. This difference influences the acquisition of human capital and can result in a gendered division of labour, with women often taking the role of primary care-giver and undertaking part-time paid work.
Individuals seek to improve their own well-being and that of their families by balancing their work and family responsibilities, taking into account the needs and wants of other family members, including children. However, different people have different preferences for balancing work with the needs of family life. There is thus no single or universal level of work/family balance that will satisfy all workers.
Workers have incentives to seek employment opportunities that allow them to balance their work and family responsibilities. They may seek more flexible arrangements, for example, in return for lower wages. Firms also have an incentive to provide family-friendly workplaces where it is worthwhile for them to do so. Typically, firms offer more family-friendly provisions to more valuable employees. Different workers may therefore enjoy very different work/family balance provisions in the workplace.
The strongest economic grounds for government intervention are the effects that maternal work may have on children. While firms have strong incentives to provide family friendly workplaces, children may nevertheless be affected when mothers work. The evidence, however, is not strong, and whether maternal employment helps or harms children depends to a large part on the nature and quality of the childcare the children receive while the parents are at work. These effects do not therefore provide strong efficiency grounds for government intervention to mandate work/family policies for the workplace.
Even where government mandates work/family balance policies, a crucial question is whether they are, in fact, worthwhile in terms of improving work/family balance. However, most policy is not targeted specifically at work/family balance issues, but rather at raising female workforce involvement, and so is typically assessed in terms of increased participation.
A number of measures are used to allow workers to balance their working and family lives. They include leave, flexible working hours, part-time work, child care and creating a family-friendly organisational culture.
The provision of childcare can improve women’s participation in paid work, although cost can be a barrier. The quality of childcare, however, is critical. High quality childcare has no apparent negative effect on children’s cognitive development and it may indeed have positive effects, particularly for children from very disadvantaged homes.
The provision of maternity leave can lead to greater labour force participation by mothers. It can also alleviate some of the negative effects of maternal employment on children, particularly in for very young children. However, it can have negative effects on women (if too long), leading to detachment from the labour force and inducing firms to discriminate in employment where they bear some or all of the costs of provision without countervailing benefits.
Part-time work can also increase female labour force participation, but is often associated with lower job status and prospects and lower pay. Working part-time can have different effects on work/family balance depending on the characteristics and preferences of individual workers. For women who are not career-oriented, part-time work that offers extra time for family life and some market income may promote work/life balance but may not provide high remuneration or much job satisfaction. For career-oriented women, however, the low wages, low job status and limited career opportunities often offered by part-time work are less conducive to work/life balance.
The provision of flexible working hours is the most common family-friendly measure. It can allow workers more control over the balance between their family and work lives. However, the mere availability of flexible work schedules seems to have little effect on work/family balance. For flexible working hours to benefit workers they need some (perceived) control over that flexibility. If the firm is in control of a worker’s hours, flexibility tends not to improve work/family balance.
Organisational culture has an important bearing on the take-up rates of family-friendly measures provided to workers. If workers feel that taking up such policies would be detrimental to their careers they typically do not make use of them—a common reaction amongst men. In general, if organisational culture is not, in fact family-friendly, any family-friendly measures it has in place will have little effect.
The importance of the organisational culture and incentives of the firm in the work/life balance decisions of workers has significant implications for policy. Policy interventions that cause costs for the firm that are not offset by benefits can create perverse incentives—causing firms to be reluctant to hire staff likely to draw on family-friendly benefits, for example. The organisational culture of the firm is thus central to the implementation of any family-friendly policy. Government policies that require firms to provide family-friendly measures for employees are likely to be ineffective in improving work/life balance if the workplace culture is not family-friendly.
