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A budget nudge isn’t likely to be enough to close the gender gap

This will be a budget of nudges. The Liberal government wants to take a step to address the gender gap in the labour force and in paycheques, but it doesn't have billions to commit. So it appears Finance Minister Bill Morneau will launch a social experiment.

Prime Minister Justin Trudeau is already talking about it: He floated the idea of adopting a use-it-or-lose-it parental leave that's only for fathers, like Quebec's. The idea is to nudge Canadian men to take on a bigger role in parental duties, and by doing that, even the score in the work force and in paycheques.

The problem is that so far, there's little proof that nudges such as Quebec's five-week leave just for dads really closes the gap. If that's really the goal, it's Quebec's far bigger, far more expensive policy – subsidized child care – that has been shown to have an impact.

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The gender gap is a question of fairness, but Mr. Morneau also has to see it as an economic issue. Much of the economic growth of the past 70 years was fuelled by women entering the work force in increasing numbers, and earning more money, but that trend has largely stalled for about 15 years. Closing the gender gap would boost the economy.

There are two related kinds of gender gap: Fewer women are in the labour force, and, on average, women make lower wages than men.

The latter part is the marquee political issue: Women working full-time earn about 88 cents for every dollar a man makes.

The Liberals want to take up that fight with a few mostly symbolic moves, pay-equity legislation for the relatively small numbers in federally regulated sectors, and an equal-pay initiative for public servants.

But studies suggest that most of the gender gap doesn't come from obvious discrimination, such as a man being paid more for exactly the same job. And a Statistics Canada study published last year found it is not because women work in lower-paying occupations.

The real gap opens up with kids, when women take on more of the child-raising role. Harvard economist Claudia Goldin found women tend to increasingly value "temporal flexibility," shorter hours or flexible schedules, but often the big bucks go to those who work long hours or are always available, such as a lawyer aiming to be a partner at a big law firm.

Sarah Kaplan, director of the Institute for Gender and the Economy at the University of Toronto's Rotman School of Management, says employers think women are going to be less available when they have children and give men the critical – better-paying – work.

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So why not push men to take parental leave, too? Five weeks of leave isn't that expensive for the treasury.

It sounds a little like the behavioural economics that Richard Thaler and Cass Sunstein suggested a decade ago in a book called Nudge, which suggested policy makers could frame choices for the public to encourage better outcomes, often for less money. Maybe pushing dads to take parental leave will change parenting, and close the gender gap.

Ms. Kaplan believes in behavioural economics – asking people to sign their tax form at the top instead of the bottom has been shown to reduce fraud, she noted. But she thinks five weeks of leave is too small a nudge. "The problem is the stuff that's cheap to do isn't going to move the needle," she said.

If the government forced parents to divide a year's leave evenly, that might have an impact, but that's too radical a political move. But five weeks won't change fathers' parenting roles, or employers' perceptions of them, Ms. Kaplan argues.

And, of course, parenting goes on long after leave, and according to Ms. Goldin's research, the effect on earnings grows, as women are seen as primarily responsible for parental duties. Ms. Kaplan thinks that if parents evenly divided their parental leave, as they do in Sweden, they might divide parental responsibilities later, but she said there's no evidence of that yet.

But there's already a policy that has an impact, also in Quebec. Since 2000, its subsidized child-care program has shrunk the gap in the labour-force participation rate between women and men. Women work more; they return to work sooner after having kids and that tends to be better for earnings. The labour-force participation rate for Quebec women has kept growing, surpassing that in the rest of Canada, which has stalled.

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That's a program that's already shrinking the gender gap. Yet it doesn't come cheap. It would be a huge new national social program that would dent the budget. But Mr. Morneau and the Liberals are likely to find changing something this big takes more than a nudge.

Finance Minister Bill Morneau is not sharing any specific details about this month’s federal budget, but he says a priority will be creating 'real and fair' opportunities for Canadians. The Canadian Press
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