More favourable taxation policies for families with two incomes and an increase in child-care benefits have helped bring thousands of Canadian women into the workforce since 1995 and that has had a direct benefit to the economy, according to a working paper by the International Monetary Fund.
And women at work have helped propel Canada’s economic expansion in that period, despite growth in labour productivity that is merely average, according to the report’s author
Female participation in the workforce increased to 73.5% in 2004, from 67.7% in 1995, putting Canada behind only a few countries like Sweden, Norway and Denmark in the percentage of women working.
Canada led Organization for Economic Cooperation and Development (OECD) nations in economic growth, in part because mothers joined the workforce.
Countries such as the U.S., U.K., Australia and Japan lag Canada in rates of women working and that could present problems as the labour force ages, leaving fewer people to pay for seniors’ health costs and pensions, the author says. It also has had an impact on their economic growth, because families with less spending money are less likely to indulge in retail spending.
She recommends other countries find ways to boost female participation in the workforce before an aging population catches them with high debt and a shrinking pool of labour.
The author traces the increase in Canadian women working in part to the increased amount of take-home pay Canadian families enjoyed in the late 1990s after the federal government relaxed taxation measures meant to deal with Canada’s high deficit.
Elimination of a 3% general surtax for low- and middle-income families in 1998 and for all Canadians in 1999.
Elimination of a 5% deficit-reduction surtax for incomes up to $85,000.
Lowering of middle-income personal income tax rates to 24% from 26% in mid-2000.
Because women are usually the second earners in the family and make a lower income, their decision on whether to work often depends on how much more of their income goes into family coffers.
The author calls the difference between income lost to mothers who stay home to raise their children and the take-home pay of mothers who work the "secondary earner tax wedge.: She estimated the net tax wedge on secondary earners, usually mothers, fell by 30% between 1995 and 2001.
