Fertility rate and female employment : incentives that could be taken by government to boost these issues concurrently

Abstract

The EU is facing the problem of an ageing and declining population. This is raising concerns about the sustainability of the current social security systems based on the PA YG systems resulting in policy problems which relate to healthcare and pensions. In addition, such a demographic change is negatively affecting the dependency ratio and therefore intensifying the burden on the productive age bracket. Various studies show that increasing employment rates and fertility rates concurrently is necessary in order to address the economic problems related to ageing populations. The challenge is to address both policy targets at the same time as the two objectives can become conflicting if not addressed with the right mix of policy tools. This essay discusses prominent economic theories suggesting that fertility displays a negative correlation with female employment and determines their validity in today's circumstances both on a micro and macro level. It also explores, through quantitative data collected from various secondary sources, at what levels these issues are being experienced in Malta and establishes whether the local current and prospective measures suffice to address these divergent issues. These measures are contrasted, through literature review, with the policy interventions made by a selected EU Member State that succeeded to address these problems simultaneously. This study concludes that the measures adopted in the local context, which are more focused on income policies, were successful to boost the female labour participation particularly in a specific age cohort but at the expense of lowering the fertility rates. The study proposes to support the current measures with complementary non-monetary enticements intended to make it easier for females to reconcile motherhood with professional life. Lastly, this essay outlines recommendations of various incentives, predominantly addressing the need for childcare opportunities, which can have an aggregate positive effect to boost female participation in the labour market without undermining fertility.