The gender pay gap describes the average difference in hourly wages between male and female workers with similar qualifications and experience. In Latin America and the Caribbean, studies have documented this gap across all economies.
Women in the region earn 22% less than men, regardless of their years of education. Furthermore, this gap has increased by two percentage points since the start of the century, even as more women have gained access to higher education during the same period.
What Are the Factors Behind the Wage Gaps?
Wage gaps are partly explained by occupational segregation. In other words, women are overrepresented in sectors and professions that tend to pay less, such as the service industry.
However, occupational segregation accounts for only about one fifth of the wage gap between men and women. Various studies attribute the remaining four fifths to the penalty that motherhood can impose on women's career paths.
Research in Chile, Ecuador, and Mexico has shown that the birth of a child decreases female labor force participation by between 20 and 40 percentage points. This phenomenon is linked to the social expectation that women will assume most of the unpaid tasks related to childcare and housework.
Wage Gap, Formal Employment, and Care Responsibilities
The informal sector has served as a channel to mitigate part of this impact. In this way, care and subsistence needs are met, benefiting society as a whole. However, some costs are private—for example, women may interrupt or slow their professional trajectories, which can affect their economic security later in life. Other costs are social, as this implies a less efficient allocation of talent in both care work and paid employment.
In recent years, the region has undergone a rapid demographic shift. With falling birth rates, rising life expectancy, and rapidly aging populations, the demand for care is expected to grow significantly for older adults while declining for younger people in the coming decades.
Expanding Women's Employment Opportunities Is Not a Simple Solution
Expanding access to care services is often proposed as an immediate fix to help women enter the labor market. However, evidence shows that the relationship between access to care services and women's employment is more complicated.
A review of experimental studies, for example, concludes that access to childcare services can improve women's labor force participation only in the absence of other barriers, such as restrictive social norms or lack of employment opportunities.
What Does the Evidence in Latin America and the Caribbean Tell Us?
First, it is important to note that there is still limited experimental evidence on how expanding childcare services affects female labor force participation. However, there are two recent studies in Brazil that are especially revealing.
- Study in Rio de Janeiro. A study evaluated an experiment that randomly assigned slots in free childcare services for children under 4 years of age. During the period analyzed, total coverage of services in the city ranged from 7% to 15%. Female labor force participation prior to the study was high among participating mothers (68%). The authors found no significant effects of access to these services on mothers' employment, but they did find effects on the employment of older sisters and grandmothers. These impacts persisted in the medium term. Four years after accessing one of these slots, grandmothers had increased their labor force participation by an average of 20 percentage points (from 51% to 71%) and older sisters by 16 points (from 37% to 53%).
- Study in São Paulo. Between 2008 and 2018, the coverage of childcare services for children under 5 expanded rapidly, from serving 25% of the target population to covering 75%. In São Paulo, mothers' formal employment at baseline was lower than in Rio de Janeiro (44% among eligible mothers). As a result, access to free childcare services was associated with a 20% increase in formal employment among mothers.
This evidence suggests that creating effective solutions to boost female labor force participation requires a careful understanding of contextual factors, including existing family care arrangements, social norms in the community, family preferences, and the employment levels of mothers and other adults responsible for childcare and unpaid tasks at home.
IDB Strategies to Address Care Needs
Strategies to address families’ care needs go beyond expanding service coverage. For example, this "toolkit" includes interventions such as:
- Job search assistance programs
- Extended school day programs
- Workplace policies for flexible schedules
- Public transportation policies that support commuting between home, work, and care facilities
- Parental leave policies
- Programs to enhance the quality of care services
- Preschool and school transition programs
This is the approach of IDB Cares, the Inter-American Development Bank's effort to highlight the importance of care in the region's public policy agenda. On International Day of Care and Support, I invite you to learn more about IDB Cares.