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More than 80% of women in England and Wales will become mothers at some point during their working lives, according to OECD figures. Most of these women will have two children around two or three years apart, spending at least 20 years of their adult lives with a child under 18 and creating significant childcare needs for some of this time.
The current price of childcare is high, averaging £149 per week in Great Britain for 25 hours of care for a child under two years old. This represents about 60% of the minimum wage earnings of someone working part-time (around 25 hours per week), and 25% of the median full-time earnings for a woman in Great Britain.
Availability is also a problem. Only 57% of local authorities report having enough childcare places for children under the age of two.
Career breaks during motherhood are a major driver of the increase in the gender pay gap over the child-bearing years. Mothers’ earnings ten and even 20 years after the birth of a first child are about 20% lower than a similar childless woman. Fathers’ earnings over the same life stages do not show any evidence of these “child penalties”.
Having children creates a double hurdle when a mother is deciding whether and how much to work. First, childcare fees substantially reduce take-home pay. But also, time is valued differently. When not at work, it changes from leisure time to time spent with your child (and a little leisure too, of course).
Both hurdles reduce the attractiveness of work. But while the latter reflects a combination of individual preferences and social norms, the former – childcare costs – can be overcome with the right policies. If these policies do not alleviate childcare costs and give parents (affordable) ways to work, mothers will lose out in the long term – but so will the wider economy.
On an individual level, wage growth is affected by the decision to work part time or not at all because only full-time employment typically leads to wage progression. The relative penalties of choosing a part-time job or no work are particularly marked for graduates.
Lower wages will also have a negative impact on both women’s independence and on their productivity, feeding into the economy. Low wages and hours worked by mothers, combined with parents’ separation are an important source of child poverty. In less educated families, women’s employment is the most effective measure against the incidence of child poverty.
Research shows that childcare subsidies are the most effective policy for raising mothers’ labour supply, particularly among low-skill households. Unsurprisingly, subsidies conditional on work are a more effective incentive to get people to seek or remain in employment than unconditional child credits, which can reduce the attractiveness of work.
Research also shows that childcare subsidies can be partly self-financing over the long term. If mothers work more now and then enjoy more wage growth over time, they are more likely to continue to work and earn more in the future. This means they will pay more income tax, which could offset some of the initial government spending on childcare subsidies.
But designing childcare subsidies should not just be about cost and the average price per hour of care for young children. Research on what other countries do shows there are four dimensions that typically affect families’ choices:
One factor that tends to limit the power of such policies is the strength of prevailing social norms. Public opinion (and academic literature) on the role of mothers, fathers and childcare providers in the wellbeing and development of young children has evolved over past decades. It is now much more socially acceptable for mothers to work and fathers to be more involved in childcare.
Such thinking also affects government choices when it comes to developing policies to support families. Individual perceptions on the role of mothers as the primary caregiver have been found to drive both mothers’ labour force participation and their decision to have children in cross-country comparisons. These social preferences will also drive political support for childcare policies and hence policymakers’ choices.
In the medium term, childcare subsidies can reduce the gap between mothers’ and fathers’ career paths, and increase mothers’ economic value in the working world. But beyond this, higher rates of employment among mothers in this generation will also influence the next generation’s perceptions about the compatibility of career and motherhood.
By helping to shape future social norms, childcare subsidies could offer more choices to mothers – not only today, but even more so for the next generation of women.
Helene Turon does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.
The EU is preparing to abandon its longstanding restrictions on state aid to take on US and Chinese subsidies over green technologies. European Commission president Ursula von der Leyen is spearheading a new commitment from EU leaders to “act decisively to ensure its long-term competitiveness, prosperity and role on the global stage”.
She has talked about the need to counter hidden subsidies from the Chinese, both in green tech and in other sectors, though the trigger for the EU’s new approach is really President Joe Biden’s Inflation Reduction Act (IRA). This has committed the US to a record US$369 billion (£305 billion) to green its economy, including using tax breaks and subsidies.
It effectively tears up the international consensus around not using state aid, embracing what the US has railed against for years. The Economist has said that globalisation is no longer about racing, but racing and tripping others.
The EU is now proposing to introduce its own tax credits and subsidies for cleantech companies, as well as fast-tracking regulation in this area.
Meanwhile, the UK has been coming under pressure from the likes of car manufacturers to respond. So far, it has been trying to find exemptions to the US’s general approach of only offering incentives to products made in America, while also claiming the UK has no need to subsidise these kinds of areas because it is already ahead.
The economics of this drift to protectionism are worrying. Our recent research on the effects of state subsidies in China suggest that such policies could do the US and EU economies more harm than good overall.
Since the dawn of the industrial revolution, states have played a significant role in developing their economies. China is the recent prime example, where the use of subsidies to develop particular industries such as electric cars or solar panels has been highly visible.
India seems to be moving in the same direction. The government is paying half of the cost of making computer chips, among a variety of incentives to encourage investment in different sectors.
Equally, in the developed world, government procurement has driven many world-changing innovations. Whole sectors such as biotech and information technology relied on government procurement to get started. America’s Silicon Valley originally grew on the back of military contracts, for instance.
Research in this area does acknowledge a case for subsidising infant industries in which a country wants to specialise. China’s state subsidies in the steel and solar panel industries would be a good example.
Yet there is a price to be paid: the money a government spends means that less will be available for helping its citizens in other ways. For example Brazil’s wheat-industry subsidies in the 1980s were estimated to have produced a net loss of 15% to welfare spending.
Around the same time, it was estimated that if the EU removed the common agricultural policy, the extra money available for government spending could increase real incomes by between 0.3% and 3.5% as a proportion of GDP. Findings like these probably explain why the World Trade Organization has discouraged state aid for decades.
The new green subsidies will create winners and losers at different levels. Within the EU, for example, it will un-level the playing field between member states. Those that can afford to spend more on their green tech industries will potentially crowd out those with less.
Even within a country, there’s unlikely to be a win-win. Our research team has recently published a paper about China’s subsidies, using a new approach that makes it possible to estimate the direct and indirect effects on subsidised and non-subsidised firms at the same time.
This is the first time anyone has looked at subsidies in this way. Our project looked at 1998-2007, since those were the years where the necessary data was available.
We found that subsidised firms become relatively more productive, thus making them more competitive. Yet firms that are not subsidised can see their productivity growth reduced.
The determining factor is whether they operate in a geographical cluster alongside subsidised firms. When more than a quarter of firms in a cluster in China were being subsidised, the remainder suffered.
Those losing out were typically foreign-owned firms and those owned by the Chinese state, while private Chinese firms were the beneficiaries.
When we aggregated all the data, it showed that this negative indirect effect tends to dominate. In other words, subsidies produce unintended losers and make the market less competitive and more inefficient as a whole.
The bottom line is, subsidies are not without problems, even for China. In the last decade we have seen what “losers” can do to an economy, or a society - think of movements towards populism and autocracy in many places.
Therefore, there needs to be a more thorough debate about the benefits and costs of subsidies before states apply them, and some carefully designed policies to prepare for the potential losers.
The authors do not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.
Why do I feel happier when the sun is out? – Mabli, aged 13, Barry, Wales
That is exactly the same question I asked many years ago when I was sitting on a nice sunny beach, far away on a lovely warm island. I remember thinking, “Oh gosh, tomorrow I need to fly back to rainy London where the weather is horrible. I don’t want to go; the weather will make me unhappy.”
I actually did some research into whether sunshine does make us happier. I’m a professor of economics, and I wanted to look at whether higher temperatures, more sunshine and less rainfall on a given day makes people happier. Happiness matters to economists because it is an important way of measuring quality of life. Did you know that the Office of National Statistics has been collecting happiness data for more than 10 years?
My own research has shown that while sunshine matters as a seasonal factor, it doesn’t matter much whether it’s sunny on any given day here in the UK. The sunlight you get over the course of a season is what’s important. You may generally feel a bit unhappier in the winter, but it won’t matter much whether it’s a sunny or a cloudy winter’s day.
Medically, exposure to sunlight causes your brain to produce the hormone serotonin inside your body. Hormones are complex chemicals that play an important role in regulating many of your body functions.
Curious Kids is a series by The Conversation that gives children the chance to have their questions about the world answered by experts. If you have a question you’d like an expert to answer, send it to [email protected] and make sure you include the asker’s first name, age and town or city. We won’t be able to answer every question, but we’ll do our very best.
Two functions that are affected by serotonin are your mood and your sleep quality. When you’re exposed to sunlight your body will make more serotonin, which can boost your mood and make you feel better. High levels of serotonin will make you a feeling positive and full of energy.
At night, when it is dark, your body produces another hormone called melatonin. Melatonin helps your body relax and will make you feel tired. It’s a chemical produced by your body to prepare you for a good night’s sleep. A good balance between these two chemicals is very important in regulating your energy levels, giving you a good night’s rest and making you feel well during the day.
However, for many people it is hard to balance sunlight with darkness. People who work indoors a lot, or live in parts of the world where it gets dark for a long time – like countries near the North Pole in the winter – may not get enough sunlight.
There is typically 100 times less light in a house and 25 times less light in an office when compared to a nice sunny day outside. This is why getting outside in the sun is a great way to get some exercise, enjoy the fresh air, and boost your mood all at the same time.
People who live in places where there is less daylight are more likely to suffer from seasonal affective disorder (Sad). Sad is a type of depression that often occurs in the autumn and winter.
People with Sad may experience symptoms such as low energy, sadness, sleep problems, and a decreased interest in activities they normally enjoy. The most common treatment for Sad is light therapy where you sit underneath bright artificial lights for some time. This mimics sunshine and will trick your body into creating serotonin.
However, there is more to sunlight than just hormones. Your skin produces Vitamin D from sunlight and this is important for strong bones and being healthy. From April to September most people in the UK make enough Vitamin D from sunshine alone. In the winter, though, you won’t get enough from sunshine, which is why the government recommends that everyone should take vitamin D supplements in the autumn and winter.
There is also an evolutionary component. Human eyesight is designed for daylight. We don’t have good night vision like cats. A long time ago in the past, when we didn’t have streetlamps, long periods of darkness might have made our ancestors nervous, fearful, and therefore unhappy. And while you don’t have to worry about being eaten by a lion at night any more, you may still have some of that fear from your ancestors 5,000 years ago.
Please remember that while sunlight can have many positive effects on your mood and health, it’s also important to be safe in the sun. This means wearing sunscreen, wearing a hat and sunglasses, and avoiding being in direct sunlight for too long. And never look at the sun directly. That’s super dangerous.
Franz Buscha does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.
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