Raising Female Employment: Reflections and Policy Tools

While there is consensus on the need to raise the time spent in the market by
European women, it is not clear how these goals should be achieved. Tax wedges,
assistance in the job search process, and part-time jobs are policy instruments that
are widely debated in policy circles. The paper presents a simple model of labour
supply with market frictions and heterogenous home production where the effects of
these policies can be coherently analysed. We show that subsidies to labour market
entry increases women's entrance in the labour market, but they also increase exits from
the labour market, with ambiguous effect on employment. Subsidies to part-time do
increase employment, but they have ambiguous effects on hours and market production.
Finally, reductions in taxes on market activities that are highly substitutable with home
production have unambiguous positive effects on market employment and production.