Tax expenditures and female labour force participation: T20 Policy Brief

This Policy Brief was first published by the T20 Task Force 5 – Inequality, Human Capital and Well-being.

The gender gap in labour force participation (LFP) has been a long-standing issue worldwide. On average, female LFP is currently 25 percentage points below men’s. The impact of the COVID19 pandemic has widened the gap since women have been hit harder by the crisis. Policy makers
often use a myriad of tax expenditures (TEs) to encourage women’s participation in the labour force. Yet, if ill-designed, TEs may be ineffective in reaching their stated goals, or may trigger undesired effects, including exacerbating income and gender inequality. G20 governments should increase their efforts to better design TEs to encourage female LFP, and should eliminate those that discourage it.

Agustin Redonda (Senior Fellow, Council on Economic Policies) and co-authors Jacob Bastian (Assistant Professor of Economics, Rutgers University), Amina Ebrahim (Research Associate, United Nations University World Institute for Development Economics Research), Nora Lustig (Samuel Z. Stone Professor of Latin American Economics and Director of the Commitment to Equity Institute, Tulane University) and Miranda Stewart (Professor of Law, University of Melbourne Law School) shed light on this topic. Read the Policy Brief.