Family Policy and Parents’ Division of Market Work in Sweden 1968-2012

Women’s earnings have over time increased, but still the transition to parenthood is a major turning point, when mothers cut back at work to accommodate new time demands at home, and earnings differentials between partners widen. However, policy developments influence how these choices are made.

In Sweden, women’s employment, in particular among mothers, expanded greatly since the end of the 1960s. With a combination of administrative income data and population registers, we analyze earnings developments of all Swedish mothers who enter parenthood between 1968 and 2012. We focus on the changes in legislation during this extensive period and whether it has influenced women’s employment and earnings. Our main interest lies in the 1971 tax reform from joint taxation of married couples to individual taxation for all men and women in Sweden. In a progressive tax system, this implies an incentive for households to have two earners rather than one high earner and one carer. We observe whether this legislative change altered women’s choice to work or care, and how this decision may be influenced by fathers’ earnings. The individual taxation will be put in context of other reforms at the time, such as the introduction of parental leave and an expansion of the public daycare system. The study will descriptively show time trends in women’s and men’s relative earnings and isolate the potential changes related to tax reform by treating it as a natural experiment, thus with difference in difference design comparing the situation before and after.

Have these reforms led to men’s and women’s employment responses to childbirth becoming more symmetrical over time? The study sheds light on how policy environments shape the distribution of work and family roles within a couple, and will contributes a historical perspective to understanding gendered work and family patterns in Sweden.