Academic journal article New Zealand Journal of Employment Relations (Online)

The Effect of Early Childhood Education and Care (ECE) Costs on the Labour Force Participation of Parents in New Zealand

Academic journal article New Zealand Journal of Employment Relations (Online)

The Effect of Early Childhood Education and Care (ECE) Costs on the Labour Force Participation of Parents in New Zealand

Article excerpt


New Zealand suffers from labour and skill shortage, has a record low official unemployment rate, one of the highest figures of working hours per capita per annum and at the same time one of the lowest labour force participation rates of women in the 25-34 age group among OECD countries. The feminist economic literature stresses the unfair distribution of paid and unpaid (mostly caring) work between men and women. Moreover, it also emphasizes a strong causal link between childcare arrangements and labour force participation and success. Based on these arguments we suggest that the comparatively low female labour force participation rate of mothers with dependent children in New Zealand can be explained at least in part by how childcare is organized. Evidence from the relevant literature supports this contributing to policy changes. The transaction cost approach is also used to explain the participation patterns for women in the 25-34 year age-group and questions whether provision of childcare should be public or private. In conclusion we suggest a variety of avenues for New Zealand to make better use of its labour force and achieve a more potentially more efficient balance between paid and unpaid activities.


The New Zealand early childhood education and care sector is in a state of flux as it adjusts to changes in the regulatory and funding environment. Efficient early childhood education and care expands the employment and education options of parents, their potential productivity and equality. This paper first provides an overview of the nexus between childcare and labour market activity found in the relevant economic literature, including recent insight provided by the feminist critique. We then look at recent patterns in female labour force participation and time budgets in New Zealand and describe recent developments in the childcare sector in terms of provisions and funding arrangements. This leads us to question recent emphasis on more market based provisions. Our focus then shifts to transaction and other costs incurred by parents using outside home childcare and further examine the question of private versus public provisions of childcare. We conclude the article by examining alternative models for family and labour market policies from Scandinavia in order to identify a more efficient distribution of paid and unpaid work in New Zealand.

Feminist Economics on the nexus between care and labour market activity (theory)

All OECD countries have a persistent or ever growing need for caring (unpaid) labour (OECD, 2006 and Folbre, 2001) which, as in the past, is still mostly provided by women (Statistics New Zealand, 2001). At the same time, developed countries are experiencing increased female (waged) labour force participation. This leads to a dilemma because what may be regarded as good for gender equality might actually lead to neglect of children, the elderly and other persons dependent on care. It could also be accompanied by the so-called double burden and result in an experience of overworking among many mothers with dependent children (Folbre and Bittman, 2004) and/or a decline in fertility rates exacerbated by aging populations (Folbre, 2001; 2003).

So long as the traditional gender division of labour within and outside the household persists and the assumption that child welfare is strongly related to the care given by parenting persons, the problem of child welfare is placed at the core of this dilemma resulting in less time devoted to childcare. The OECD in its report Starting Strong II explicitly stresses that aiming at increasing women's labour market participation, reconciling work, family responsibilities on a more equitable basis for women and addressing issues of child poverty and educational disadvantage are linked (OECD, 2006: 19). Moreover, these goals can be achieved simultaneously by governments investing in early childhood education and care (ECE)1 (ibid: 19). …

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