KWDI Korean Women’s Development Institute

The utilization rate of women workforce in Korea has increased steadily during industrializing period. However, compared with other OECD countries, the gap between men and women in the degree of workforce utilization remains wide and female employee's career break at child rearing period is still widespread in Korea. Although government has introduced and implemented various women workforce-related policies in order to improve the situation, the rate of women workforce has been stagnant since the beginning of 2000s. When compared with major advanced countries, Korean women still face great disadvantages such as lower wages, employment contract with fixed terms and horizontal and vertical occupational segregation by gender. In other words, conditions for female employment has somehow been improved in both quantitative and qualitative way, but there is still a long way to go to solve fundamental problems related to female employment.

This study, therefore, analyzes the effect of socioeconomic policies which affect women workforce utilization including tax policy, social security policy, and policy for balancing between work and family such as maternity protection in addition to women employment policy. Further, this study suggests a direction for women employment policy based on the research results in oder to improve the structure of female employment in both quantitative and qualitative way. Also some suggestions are made for future tasks of socioeconomic policies to affect women workforce.

In order to obtain the purpose of this study, we examine the trends and notable factors of women workforce utilization through analyzing the state and structure of it in mid and long term base. also we analyze some examples of major OECD countries to find implications for both short and long term direction of women workforce-related policies and detailed tasks for those policies. we then closely examine current women workforce-related policies; Those include socioeconomic policies such as child care policy, childbirth support policy, tax and social insurance policy as well as female employment policy. Moreover, we examine the state of Korean women's marriage, childbirth, child care and its relationship with those policies above.

Further, we carry out a survey on a total of 1100 women aged 25-39 including 500 married working women, 300 married non-working women and 300 unmarried working women to find out thoughts on women workforce-related policies and policy demands. The results show that women prefer policies that provide cash grants for child care or long-term child care support to policies that provide exemption or temporary subsidies to support households with multiple children. Women also prefer policies that directly support child care such as maternity leave and on-site day care to policies that only encourage childbirth rate.

In addition, We try to analyze the relationship of fertility related policy system with female employment. Using the panel bivariate probit model with the patterns of fertility and work and 2SLS(IV) panel model, we estimate the effects of fertility related policy. We start to estimate those models using KLIPS(Korea Labor Institute Panel Survey) in which the cohort group is built with 3,112 women who have stayed from the first survey in 1998 to the tenth survey in 2007. Thus, due to the two lagged variables, our final analysis uses 24,896 observed values of 3,112 women who have given births of 380 children.

To analyze the tax and benefit system on female employment, we construct Korean Tax and Benefit Model(KWDI-OECD Taxben Model) with tax and social security system, child care subsidy system, maternity protection system and earned income tax credit system. As the result of analysis using KWDI Taxben Model, average tax rate or marginal tax rate in Korea was lower that those of other countries in OECD Members. In other words, the work incentive of tax system is higher. And the household's burden of tax and child care cost is different considerably by family types, employment situation of parents, etc. Especially, as the average tax rates in particular earning ranges increase rapidly due to Korean stair-type support system for child care fee, the work incentives also drop suddenly. We analyze how tax and benefit system affects on net replacement rate of maternity leave and parent leave. The result is different depending on each household income. Accordingly, payment with fixed range benefits household more effectively than flat-sum payment.

Finally, based on the analysis, we make policy recommendation on Child Education and Care, maternity protection, taxation, childbirth, and Reconciliation of work and family life to raise utilization of female workforce. We then recommend a policy promotion system which can adjust and reinforce those policies in oder to improve effects of policies related to female workforce. And we suggest to improve continuously KWDI Taxben Model to make full use for enhancing the effectiveness of female-related policies.

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