Why gender inequality follows women into retirement

On Tuesday 25 August Qquillaccori G. López will hold a trial lecture on a prescribed topic and defend his thesis for the PhD degree at NHH.

Title of the thesis:

«Essays on Public Economics»

Across OECD countries - including Norway - women earn less in the labor market, take on more unpaid care, and retire with lower pensions than men. These gaps are related to each other: because pension systems are based on formal market work, they carry gender inequality in the labor market through retirement by design.

In her thesis, Qquillaccori García López examines how social insurance policies can target the consequences of the unequal distribution of care responsibilities.

The first chapter compares two approaches through which public policy can narrow the gender pension gap: correcting it, by compensating mothers’ pension entitlements for care-related career breaks, or preventing it, by encouraging female employment after birth. Both were implemented in Norway. The corrective policy reduces the pension gap, but at a substantial cost, by inducing beneficiaries to retire earlier. The preventive policy raises mothers’ lifetime earnings and is more cost-effective, but these gains do not reach pension benefits because of how they are calculated. Pension design matters for the effects of equality policies in old age.

The second chapter focuses on anticipation and asks whether awarding pension credits to mothers early on can discourage them from working. Studying the 1992 introduction of childcare pension credits in Norway, it finds no effect on maternal employment or earnings despite a substantial increase in future pension wealth. This highlights the importance of the timing of pension reforms for their labor supply consequences.

The third chapter turns to paid carers. It studies a 2012 Spanish reform targeting domestic workers, who were predominantly informally employed. The reform lowered the cost of formal employment, reducing informality in the sector to roughly half. However, it also lowered the contributions of formal workers, and thus their future benefits. This reveals a trade-off between expanding coverage and preserving contribution standards.