Exploring Norway's Fertility, Work, and Family Policy Trends

Report

20 June 2023

4. The work/family balance in Norway

Maja Gustafsson

Abstract

Stable labour markets provide security in terms of steady earnings and good family-oriented labour market conditions are important in determining whether parents can continue to work after the arrival of a child in their household. Labour markets can thus affect how early, and how many, children families decide to have. In Norway, the focus of policy has been on facilitating the labour market engagement of dual-earner families on a full-time basis. Policies encourage high employment rates among men and women and have helped parents in families to become “co-providing and co-caring”. Nevertheless, some groups are facing labour market insecurities, notably the lower-educated, including youth and young men in particular. However, these issues alone do not seem to have led to the sustained fall in births seen in Norway during the 2010s.

4.1. Introduction and main findings

Making decisions about whether, when and how to raise a family is hardly ever simple, and labour market conditions and policies can have important implications for family life. One of the main policy goals in Norway has been to operationalise a family policy model that effectively achieves the “ultimate balancing act” between work and family right for both partners in a household (Danbolt, 2016[1]),

Economic conditions have facilitated many households to be dual-earner families, and Norway frequently scores in the upper end among OECD countries when it comes to indicators of household financial stability, standards of living and gender equality (OECD, 2022[2]), and this has helped maintain high fertility rates through periods of falling fertility in many other OECD countries (OECD, 2019[3]). Nevertheless, while most benefit from this financial security, some groups – particularly lower-educated, youth and young men in particular – risk missing out as they face insecurities in labour and partnering markets.

This chapter considers the linkages between labour market opportunities, the work/family balance and fertility decisions of people in Norway amidst suggestions for future policy. It first considers how existing policy has facilitated family life for dual-earner families in Norway and subsequently evaluates to what extent some groups face labour market insecurities despite tight labour markets, concluding with evidence on OECD-wide relationships between fertility and labour market outcomes.

4.1.1. Main findings

Norway has done well to develop a family-friendly welfare state that encourages dual-earner couples as children arrive. Overall, this model allows both men and women to engage on the labour market, encouraged by small gender wage and gender employment gaps. The gender imbalance in uptake of part-time work is one area where the labour market in Norway can be improved from the perspective of the ‘co-provider’ family model. One way is to encourage a better sharing of (part-time) parental leave entitlements (Chapter 3), another is to encourage more fathers to join mothers in the short-term take-up of part-time work following the arrival of children in the household. Another avenue for action is to work towards more full-time work among mothers in the longer term as children grow up.

Norway has also come a long way in promoting a more equal balance of unpaid work in the household, with one of smallest time-use gender gaps. Sharing responsibility in what is perceived as a fair way has been shown to be an important consideration when couples make decisions about family formation. While mothers still find it a bit harder than fathers to combine family and paid work, it seems that Norway’s policy focus on supporting ‘co-carer’ families is working.

Being in work and managing to combine it with family responsibilities in an effective way are important matters for family formation considerations, but it has also been shown that the security of one’s job and income can be just as important. Norway’s labour market policies are working in this regard. Unemployment is low, even among the youngest workers, and the vast majority of Norwegian workers are provided with job security, fair contracts and reskilling opportunities. Although Norway will continue to work towards ensuring that some disadvantaged groups get into good jobs, such minor tweaking will most likely not result in any changes to the fertility rate at the aggregate level.

The results from cross-national regressions of within-country changes in labour market outcomes on fertility in specific a country over the period 2002-2018 mainly suggest that increases in female and male employment are positively associated with increases in the fertility rate and decreases in the average age of mothers at the birth of their child. This suggests that across the OECD on average the male breadwinner model is no longer as pervasive as over most of the 20^th century as women’s employment is now an important factor contributing to fertility.

4.2. Most parents are in full-time work in Norway

4.2.1. Employment rates are high in Norway

Relatively large proportions of people are employed in Norway compared to the OECD average, and this is especially true for women. In 2021, 81% of women were in employment in Norway, compared to 69% across the OECD (Figure 4.1.). Among men, 86% were employed in Norway, which is in line with the average across the OECD. Despite the high current employment by international standards, there has been a slight fall in employment over time in Norway. Meanwhile, employment rates were stable or increased across many OECD countries.

Figure 4.1. Employment increased across the OECD over the past decade, but not in Norway

High employment rates extend to women who become mothers, in contrast with many other OECD countries. The employment rate was 80% for women aged 25-54 without children under 15 in 2020, and only slightly lower, at 78%, among mothers whose youngest child is less than five years old (Figure 4.2.). Employment rates are back up to 81% for mothers whose youngest child is under 15 years old. The pattern with only slightly lower employment rates among women with young children is similar in Denmark and Sweden. At the opposite end of the spectrum, women with children have significantly lower employment rates than women without children in countries like the Czech Republic and Hungary.

Figure 4.2. Women in Norway remain in employment after children come along

The high employment rates among mothers have been helped by changes in how families care for children. Previous OECD research has found that the proportion of people who are out of work in order to care for family in Norway has shrunk by 11ppts between 2002 and 2017 (Fernandez et al., 2020[4]). Over the course of the 2000s, there were considerable changes to childcare and family policies to help couples combine work and children (Chapter 3). The effect of these policy changes on behaviour was likely strengthened by changes in attitudes towards childcare. Between 2002 and 2010 there was a shift from thinking on the best form of daytime care for pre-school aged children from childcare services in combination with home care to childcare services only (Ellingsaeter, Kitterod and Lyngstad, 2017[5]).

4.2.2. Families are increasingly co-providing in Norway

As policies and norms in support for gender equality develop (Chapter 5), the ability of families to ensure that both parents remain in the labour market as children come along has become even more important. Norway has made efforts to keep up with changing gender norms and reduce motherhood penalties through their focus on co-provision and co-caring within families (Ellingsæter, 2017[6]). Policy reform away from the traditional male breadwinner model started in the 1970s, with Norway moving towards creating a more gender-equal and woman-friendly welfare state, that focuses on women as co-providers in the labour market. The long-standing focus on enabling women to enter the labour market has brought success: the employment gap in Norway is among the smallest in the OECD. In 2021, only 4.7 ppts more men than women were employed in Norway, and this gap has been largely stable since 2009 (Figure 4.3.). The employment gap in Norway in 2021 was somewhat larger than the gap of 2.9 ppts in its Nordic neighbour Finland. It is substantially lower than the OECD-wide gap at 16.6 ppts Figure 4.3..

Figure 4.3. The gender employment gap in Norway is among the smallest in the OECD

The objective of ensuring gender equal treatment on the job also involves working to shrink the gender pay gap. With a gender wage gap at median earnings of full-time workers of just under 5%, Norway ranked fourth in the OECD in 2021 (Figure 4.4.). This is comparable to the pay gap of just above 5% in Denmark and is substantially lower than the OECD average at just under 12%. It is also lower than in some other Nordic countries, including Finland (17%) and Iceland (13%). Norway has made good progress toward more equal pay since 2009, with the gender earnings gap falling by 3.7 ppts from around 8%. This fall was slightly larger than that across the OECD at 2.7 ppts. A low and shrinking wage gap is a good sign that Norway is not becoming complacent on its way towards a co-provider welfare state. Previous OECD research has found that smaller pay gaps overall also translate into comparably small within-family pay gaps – albeit somewhat larger than in countries like Sweden and Denmark (OECD, 2017[7]). When pay is more balanced, individuals will be encouraged to contribute in equal measure to hours spent in paid work.

As the norm to have dual-income families becomes stronger, it might be increasingly relevant to factor in parenthood penalties when making decisions to have a(nother) child. In Norway, survey evidence shows that a larger proportion of women than men who do not yet have children report to expect negative impacts on their career and work hours if they were to have a child (Cools and Strøm, 2020[8]). Women who have already had a child are less likely to think this way, however. The proportion of women without children who expect negative effects on their career is greater than the proportion of women with children who believe they have experienced negative effect from their existing children. There are a few possible explanations for this. For example, women who know that they will face parenthood penalties might be more likely to self-select into not having children than women who work in jobs where these penalties are smaller or less common. It is also possible that women who are more interested in their career are more likely to notice negative labour market effects and see them as problematic, compared to those who are more relaxed about their careers.

Figure 4.4. Gender wage gaps in Norway are relatively small and decreasing

It will be important that Norway continue its work to limit parenthood penalties if families without children choose to postpone having children to a later stage in their careers, or not have any at all, in part because they expect to see negative career effects. Studies have shown that the motherhood wage penalties are smaller in Norway than in many other OECD countries. For example, comparing different European sub-regions, Cukrowska-Torzewska and Matysiak (2020[9]) found in their meta-analysis that the motherhood wage gap is smallest in the Nordic countries, Belgium and France. Relatively small gaps were also observed in Southern Europe. The gap was largest in Central and Eastern European (CEE) countries, followed by Anglo-Saxon countries. While motherhood wage penalties are smaller in Norway than in other countries, they are still palpable for individuals. Estimates of the size of wage penalties in Norway differ depending on model specifications. For example, Cools and Strøm (2016[10]) found that in the 1-5 years after having a first child, wage penalties to motherhood range from a 1.2 % wage reduction for women with lower secondary education to 4.9% for women with the highest level of education. They also show that the wage penalties are largest for mothers working full time and in the private sector, and that wage penalties increase as children age (Cools and Strøm, 2016[10]).

Up to a certain point, higher-earning women, or women who expect to experience wage growth, will experience greater monetary losses than lower-earning women if they have a child (Kornstad and Rønsen, 2017[11]). This study found an “U-shape” relationship in that an increase in wages is associated with a decreased chance of having a child up to a threshold wage level, after which an increase in wages lead to an increased chance of having a first child. The estimated typical wage for women is below that of the threshold wage, which suggests that a majority of women will face a situation where an increase in wages will be associated with a decreased likelihood of a first birth. Kornstad and Rønsen (2017[11]) also concluded that the U-shape is more pronounced for younger cohorts (born in the 1970s) than older cohorts (born in the late 1950s), suggesting that women today are more sensitive to wage changes than women were in the past.

4.2.3. Encourage a more gender equal take-up of part-time work

Even though the relationship between part-time work and fertility is context-dependent, in large part, motherhood penalties are driven by mothers leaving work for parental leave in the shorter term and taking up part-time work in the longer run after children arrive (Markussen and Strøm, 2022[12]). The proportion of women working part time in Norway is in line with average proportions across the OECD, but considerably greater than proportions in other Nordic countries (Figure 4.5.). In 2021, the proportion of employed women in part-time jobs was similar in Norway (19%) to that in the OECD (20%), but higher than the rate in Iceland (17%), Finland (15%), Denmark (13%) and Sweden (10%). For women, the proportion in part-time jobs has decreased by 4.0 ppts between 2009 and 2021 in Norway, whereas the corresponding proportion of men increased by 2.5 ppts. This increase is a greater than in nearly all other OECD countries, except for Finland (nearly 4 ppts increase) and Chile (almost 5 ppts).

Figure 4.5. More women work part-time in Norway than among its Nordic neighbours

In addition to the long-standing goal of building a co-provider family model (Ellingsæter and Steen-Jensen, 2019[13]), it is possible that some Norwegian families also could benefit from a relaxation of the full-time norm, on a temporary basis for men and fathers (OECD, 2017[7]). Reliance on gendered part-time work around the time children are young is associated with higher motherhood career penalties as well as gender inequalities in the time available to spend with children. Norway’s current labour market policy focuses on limiting the negative economic aspects of part-time work while encouraging the norm of full-time work, but nevertheless making concessions to parents who want to spend more time with their families (Ellingsæter and Steen-Jensen, 2019[13]). As men increasingly want to play a central role in their children’s lives, there may be more scope for families with young children to better share the take-up of part-time work between parents and reduce the part-time work penalty on women (Jensen, 2016[14]). This could be especially relevant for the private sector where the fatherhood penalty (albeit smaller than the motherhood penalty) is larger than in the public sector (Cools and Strøm, 2016[10]).

It is good that employees in Norway with young children have the right to request part-time work or a reduction in their working hours with employers only able to refuse to comply on serious business grounds. Furthermore, it is important that the Labour Environment Act stipulates that lower hourly wage for part-time workers is discriminatory and must not exist since this in theory should limit wage penalties that arise directly from part-time work (Danbolt, 2016[1]).

Another avenue for action is to ensure that jobs across all sectors can be offered as full-time positions too. For instance, the use of part-time contracts is widespread across the female-dominated healthcare sector and while unions have already called for stricter legislation and demanded that all workers who would like full-time positions should be offered them, little has happened as of yet (Eurofound, 2011[15]; Ellingsæter and Steen-Jensen, 2019[13]). Social partners play an important role in Norway’s labour market institutions (Box 4.1).

Box 4.1. Tripartite labour market institutions

In Norway, trade unions and employer organisations are key players when it comes to negotiating wage and conditions of work contracts. In this collective bargaining, the role of the state is limited to facilitating negotiations (providing statistics and relevant information ahead of negotiations) and providing a legal framework for resolving disputes of interest (the Labour Disputes Act). The main organisations are the NHO (employers’ organisation) and LO (labour organisation) and their affiliated sectoral organisations. In additions to these, there are a number of other employers’ and workers’ organisations. Wages may be negotiated either at the central level, the sectoral level or at the local level (NHO, 2022[16]).

Unions and collective bargaining can play a role in ensuring that there are stable jobs across sectors and levels of seniority, and especially that labour rights keep up with needs in changing workplaces and labour markets. In 2017, 69% of workers in Norway were covered by collective bargaining agreements, which was higher than the OECD average at 32%, but lower than the numbers in Sweden (88%) and Finland (89%) (OECD, 2022[17]). While workers covered by unions may experience more work security than those not covered by them, Norway is slightly different from other Nordic countries with a high union coverage in that many of the rights negotiated by unions have passed into law (Arbeids- og inkluderingsdepartementet, 2022[18]).

4.2.4. Keep using information-based tools to shrink parenthood career penalties

Uncertainties about the size and factors playing into the gender pay gap could also induce parents to postpone the decision to have children. If parents assume that their career will stall a little while children are young, career-focused prospective parents will likely try to get some promotions out of the way in their 20s and 30s, before settling in a role they would be happy with for a while. The Norwegian Government might be able to do more to share information about the nature of pay gaps and how to avoid them. Pay audits can be one tool through which companies can gather information on the gender balance across different functions in firms, and any possible changes that happen over time, as emphasised by Arbeidsforskningsinstituttet (The Work Research Institute) (Solberg, Wathne and Madslien, 2016[19]).

An equal pay auditing system is the most comprehensive government strategy for using wage transparency to address gender wage gaps and it is good that Norway already has a pay auditing system in place. In Norway, all public organisations and all private firms that ordinarily employ more than 50 people have to publish and share with the public the pay differentials between men and women every two years. As information gathered through audits in Norway is shared publicly in documents such as annual reports, individuals can use it when they make decisions about their career and fertility. Norway could expand the requirements to indicate parenthood penalties by letting employers report wages of parents at a given period after returning from parental leave. This is not an entirely novel approach: in France, employers are bound to publish the proportion of women who received a raise in the year after they returned after parental leave to evaluate whether employers comply with their legal obligation to ensure mothers’ wages catch up with their peers’ wages (OECD, 2021[20]; OECD, forthcoming[21]).

Although using pay auditing to understand wage gaps is not yet widespread (nine OECD countries currently use them in some form), there have been some early learning lessons that will be useful to consider. First, this should not simply be a measure for larger firms but can also apply to smaller firms. There are ways to offset the administrative burden that (primarily smaller) firms face, such as using online calculators or providing financial support to firms that are not able to finance the burden themselves. High employer, employee and public awareness is also important as this can foster social pressure to complete the audits (OECD, 2021[20]). It is also good that results are publicly released in Norway. This is in line with the practice in the United Kingdom, which means that a ‘naming and shaming’ can contribute both to completion of the audit and to exerting social pressure to offer fair wages and promotions.

4.3. Families are more “co-caring” in Norway than elsewhere

Norway is ahead of the curve compared to other OECD countries when it comes to time spent co-caring in the household, with a relatively small gender gap in hours spent in unpaid work, but young Norwegian families might still be expecting more equality. Women spend about one hour (59 minutes) more than men do each day doing unpaid work in the household in Norway (Figure 4.6.). This is a little more than the gap in unpaid work time in Sweden (49 minutes). In Norway, these gender gaps have narrowed substantially over recent decades, which may be related to the decreasing popularity of the cash-for-care benefit and higher maternal labour market involvement overall (Kitterød and Rønsen, 2017[22]). Continuing to work for co-caring family units by enabling families to achieve a better gender balance in the home seems especially relevant in Norway.

Figure 4.6. Gender differences in hours spent in unpaid work are among the smallest in Norway

There may be large discrepancies in how much time different men spend with their families. For instance, previous research shows that fathers are more likely to share unpaid work in the household more equally with their female partners if they earn less than their spouse, do not hold traditionally masculine jobs (such as managing positions or blue-collar work), have the available time and – more importantly – have a female spouse who is not available in the afternoon and evening (Fernandez-Lozano, 2019[23]).

Mothers of young children aged 0-5 seem to struggle a bit more than fathers in combining paid and unpaid work. For example, while 13% of respondent fathers report feeling too tired to do chores at home at several instances per week, 19% of respondent mothers report feeling so. The differences between fathers and mothers is notably smaller when it comes to judging it difficult to fulfill their family responsibilities (6% for fathers and 8% for mothers) as well as finding it hard to concentrate because of family responsibilities several times a week (4% of fathers and 6% of mothers) (these figures exclude respondents choosing to not respond or answering “don’t know”) (Figure 4.7.) (GGS, 2020[24]). In general, however, the Norwegian welfare state seems to enable a good work-life balance for mothers, even for those pursuing high-commitment careers (Seierstad and Kirton, 2015[25]).

Figure 4.7. Mothers find it a bit harder than fathers to combine work and family life

4.3.1. Further encourage the equal co-carer family model

Adults who are happy in their relationships may be more likely to want to have a(nother) child with their partner and be less worried about a potential rupture and the prospect of splitting up the family. One important aspect of relationship satisfaction and the inclination to have a(nother) child is the idea of equal gender roles. It has been found that a more unequal sharing of unpaid housework is associated with a decreased chance of both first and subsequent births in Norway (Dommermuth, Hohmann-Marriott and Lappegård, 2017[26]).

Some of Norway’s households are using external help in the form of care and non-care household service workers that reduce the burden of unpaid care and housework at home. Of the respondents to the GGS in 2020, for example, 7% of respondents report regularly paying someone to do housework, whereas 10% of parents of young children do so (GGS, 2020[24]). Such domestic help services have grown across the OECD over recent decades and resulted in comprehensive policy packages in some countries that incentivise formal employment under affordable prices (OECD, 2021[27]) Norway provides a small income tax exemption for household services, such as cleaning and other household tasks. As such, Norwegian households can pay service workers tax-free for these tasks for NOK 6,000 per person per year (USD 607), and up to NOK 60,000 (USD 6,069) per person per year they are also exempted from employer's national insurance contributions.

While these tax and social security contribution exemptions can help some households afford domestic help, the level of support in other countries is more comprehensive. For example, Belgium provides households with social vouchers (Titres services/Dienstencheque) that can be bought for a very low price and entitles households to pay for services in and around their house. Sweden provides a tax credit (RUT-avdrag) that reduces service prices by 50% up to a high ceiling of SEK 75,000 (USD 8,740) per year. Both of these instruments are widely used in the population and have increased the possibility to engage in paid work by reducing the unpaid work burden, particularly for women (OECD, 2021[27]).

4.4. Most Norwegians have secure jobs

Exposure to labour market insecurity can negatively affect the intention to have a child. Higher unemployment in the economy increases risks of becoming unemployed and makes it more difficult to find “re-employment” in case of job loss (Cools and Strøm, 2020[8]). Kristensen (2019[28]) found that the likelihood of having a child is lower in areas of Norway where unemployment is higher. Evidence also suggests that couples remember spells of joblessness in the past: repeated spells of joblessness for both partners are associated with lower likelihood that women intend to have a(nother) child (Busetta, Mendola and Vignoli, 2019[29]).

While the labour market works well for the majority of people in Norway, some groups face elevated risks of labour market insecurity. These notably include the lower-educated youth, and in particular young men. These insecurities are not sufficient to have triggered and sustained the fall in births over the course of the 2010s, and addressing these issues is unlikely to result in a return to high fertility rates. Nonetheless, it may support some people in further enabling them to make the decisions they want to regarding family formation.

4.4.1. The risk of (long-term) unemployment has increased slightly, but this is unlikely to affect overall fertility rates

Norway is in a relatively strong labour market position compared to most other OECD countries. The unemployment rate among 25- to 54-year-olds was low in 2020 at 4.1% for men and 3.6% for women (the OECD average was 6.2% for men and 6.8% for women). However, it had almost doubled since 2007 when the overall unemployment rate stood at 2.5%. Out of those who are unemployed, the proportion of long-term unemployed people has also increased since the early 2000s, peaking in 2017 at 37.0% for men and at 28.7% the year before for women (Figure 4.8.). The share of long-term unemployment out of total unemployment has been a little higher in Norway than in the OECD since 2017.

Young people not in employment, education or training (NEET) tend to be a group facing particular disadvantages, but this is unlikely to constitute a considerable issue for family formation. Because in Norway, this group is smaller than on average across the OECD: in 2021 9.3% of 20- to 24-year-olds were NEET in Norway, which is lower than the share across the OECD (16.8%). The proportion has been relatively stable over the 2010s (OECD, 2022[30]).

As unemployment remains comparatively low, increases in the incidence of long-term unemployment or the shares of young people who are NEET are unlikely to have been a substantial driver behind the fertility declines. Nevertheless, as explained in more detail below and in Chapter 5, the subjective belief of being able to bear a potential job loss is an important determinant of fertility intentions.

Figure 4.8. The incidence of long-term unemployment is higher in Norway than across the OECD

Financial security prior to having children might be a particular concern among people with lower levels of education in an insecure labour market position earning, as the cost of children being raised at a desired standard of living may be perceived as too high (Lappegård, 2020[31]). Although the decline in first births was similar across educational levels in Norway after the 2008-09 financial crisis up until 2015, the proportion of women without children increased among low-educated women and it remained stable among high-educated women since then (Comolli et al., 2021[32]). Similar trends can be seen in the UK (Ermisch, 2022[33]). By now, the proportion of women who do not have children is greatest among the least educated women in Norway, and the same is true for men (Jalovaara et al., 2018[34]). In fact, lower-educated men in Norway are disproportionately missing out on fatherhood (Box 4.2). Norway is not alone in showing signs of a trend reversal: Denmark and Sweden also display similar patterns. In any case, as the share of women and men with lower levels of education has been steadily decreasing, this is not likely to have been a substantial factor for overall fertility levels.

4.4.2. Temporary contracts are not widespread, even among the young

It is not only being employed that is important before having children, but also the stability of that employment contract. Since employment and typical wages are relatively high in Norway compared to the OECD, achieving financial stability is a realistic outcome for many people, but it might take some time owing to, for instance, temporary contracts, trial periods and initial periods of part-time work among young adults, and particularly recent graduates. Previous research shows that the probability of having a first child rises faster in the years after a woman or her partner obtains a permanent contract, compared to the years before (Cools and Strøm, 2018[35]). A network meta-analysis of European studies on uncertain labour market outcomes and fertility also finds that temporary contracts are especially detrimental for women’s likelihood to have a child, whereas the impact is slightly smaller on men’s chances (Alderotti, Vignoli and Matysiak, 2019[36]). Economic conditions therefore mostly affect young couples who can expect to achieve better financial stability in future and postpone the decision to start a family (Dommermuth and Lappegård, 2017[37]).

Box 4.2. Some lower-educated men are losing out on partnerships and children

Some men risk losing out on family life, since more men than women remain childless, a phenomenon most common among lower-educated than higher-educated men. Chapter 2 showed that by the age of 50, almost 23% of men remain childless, compared to just over 14% of 45-year-old women. A large part of what is driving the higher childlessness among men compared to women is related to there being more men than women in fertile cohorts in Norway (Kravdal, 2021[38]). Similar patterns emerge when considering social class and income levels: better-off men and women are increasingly more likely to find stable partners and have children compared to women and men who are worse off (Maksimovic et al., 2021[39]; Doepke et al., 2022[40]; Miettinena and Jalovaarab, 2020[41]).

The highest level of men’s childlessness is recorded among those with lower levels of education. First, lower-educated men have a lower likelihood compared to higher-educated men to form a union and stay in it (Jalovaara et al., 2018[34]; Jensen, 2016[14]). Second, low fertility in low-educated men can also be a sign of particular insecurities that they face, including marginalisation on the labour market. Men also tend to have longer periods out of economic activity (figure 2.A2.1 in OECD (2018[42]). Third, when lower-educated men do find a partner, it is likely that she has a similar level of education and/or income as he does, which means that job insecurities compound within families (Lappegård, 2020[31]).

Changes in patterns of partnering are also linked with gender quality and expectations from partnerships. It has been argued that the result from the intersection between income levels and gender equality is taking new shape (Doepke et al., 2022[40]) (Chapter 5). In the past, women were inclined to ‘marry up’ to ensure that they found a partner that would provide financial stability while the women focused more on taking care of the home and the children. However, with improved gender balance in the labour market, shrinking wage gaps and a more equal division of unpaid housework, women and men are both increasingly looking for partners who have a good earnings potential and values that match their own (Doepke et al., 2022[40]). In this scenario, both lower-income women and men risk losing out of finding a partner they are content with, which matches observed patterns of partnership formation among younger cohorts (Doepke et al., 2022[40]).

Overall, job quality tends to be better in Norway than elsewhere in much of the OECD, even if it is a little lower for younger workers. Indeed, Norway scores at 2.85 on the OECD labour market insecurity index, considerably lower than Denmark (4.47) and Sweden (4.39) (OECD, 2022[43]). The young are slightly more prone to be in the more insecure temporary contracts than older adults in Norway. Out of total dependent employment, 9.3% worked on temporary contracts in 2021 in Norway, compared to 11.8% across the OECD. What is perhaps more noteworthy is that the figure in Norway is also lower than in other Nordic countries, especially in Finland (16.6%), Sweden (15.2%), but also to a lesser degree in Denmark (10.8%) and Iceland (12.5%). For 15-24-year-olds, the proportion of workers in temporary employment is a little higher in Norway (30.4%) than across the OECD (25.0%), even if not as high as in Sweden (52.9%). These proportions have only increased a little for 15- to 24-year-olds between 2009 and 2021 and have been stable for all ages in Norway (OECD, 2022[44]). Across the OECD, proportions of employees in both age groups have been stable between 2009 and 2021, but they have increased significantly in a few countries, including Belgium, Italy and the Netherlands (OECD, 2022[44]). The gender gap is slightly larger in Norway than the OECD (the share of female employment in temporary work is 3 ppts greater than the share of male employment in temporary work in Norway– compared to 0.7 ppts in the OECD). Even though it is likely to be an important factor in the individual decision of having children, the impact of the share of temporary contracts at a country-level on the country’s fertility will not be significant.

4.4.3. Keep supporting people into good jobs

It is good that more work is being conducted to understand more about the impact of financial and labour market insecurities on decisions to start a family (University of Oslo, 2022[45]), but Norway’s labour market is already well-functioning. There are some minor improvements that can be made, and these mainly involve continuing to work in areas Norway is already working with, such as continue to balance paid and unpaid work more evenly between parents, getting the (long-term) unemployed into work, and ensuring that work contract are secure enough for (young) workers. Addressing minor weaknesses in the labour market might enable some people to form families, but this is unlikely to have any major impact on the aggregate level given the small proportions of people that are affected by labour market insecurities.

Norway can keep exploiting the tightness of its labour market to provide get those who are currently out of work into good and secure jobs. Norway is already making sure that there are viable pathways from temporary contracts into employment, especially for adults who recently moved from education into the labour market and are seeking to find a foothold. It is good to see that the most precarious form of flexible contracts, zero-hours contracts, were forbidden by law in 2019, and the use of other temporary contracts to hire workers flexibly are highly regulated (The Norwegian Labour Inspection Authority, 2022[46]; LOVDATA, 2022[47]).

It is also important that Norway keeps up its focus on ensuring that lower-educated men and women do not fall further behind in an ever-evolving labour market and that they receive support where needed to retain opportunities to upskill and reskill. Engagement in adult education for upskilling and reskilling is high in Norway.1 Data from the Survey of Adult Skills (PIAAC) indicate that Norway has the highest proportion of adults who report having participated in job-related formal or informal training in the previous year (over 55%), which was similar to countries like Denmark, Finland, New Zealand and Sweden. This was higher than the OECD average (40%) (OECD, 2021[48]). It is also good that only relatively few people are disengaged from learning in Norway. Only 36% of adults do not participate in adult learning and report being unwilling to participate in the learning opportunities that are currently available to them in Norway, compared to 50% across the OECD (OECD, 2021[48]).

4.5. Evidence on the link between labour markets and fertility

4.5.1. A positive link between economic security and fertility

A long tradition of demographic, sociological and economic research finds evidence that higher observed economic certainty – both at the macro and micro level – contributes to families to have (more) children (Boca, Pasqua and Pronzato, 2005[49]; Busetta, Mendola and Vignoli, 2019[29]; Coskun and Dalgic, 2020[50]; Seierstad and Kirton, 2015[25]). On the macro side, high national employment, extensive income support systems and generous family policies are seen to promote fertility. On the micro side, a stable income, working a sufficient number of hours, access to benefits and childcare also support high fertility rates. Well-functioning labour markets are a large component of achieving secure economic conditions that support family formation.

Having an (additional) child is a long-term commitment that requires financial resources, time and other opportunity costs from both parents (Vignoli, Tocchioni and Mattei, 2020[51]; Cools and Strøm, 2020[8]). Once made, it is a decision difficult to reverse. If families are less sure that they will be in a good position to give up these resources, they tend to delay the decision to have an (additional) child until prospects are better (Vignoli et al., 2021[52]; Alderotti, Vignoli and Matysiak, 2019[36]). In Norway, a large part of feeling financially settled is having a stable job (Cools and Strøm, 2020[8]). This is understandable in a country where the norm of full-time, permanent employment contracts is strong. A job offers financial sustainability and can instil confidence about the future, which is important for the decision and the timing to have a child.

It is not always enough to have obtained a job, however, as many people also want to establish a sense of stability and focus on their early careers (Alakärppä et al., 2022[53]). Spending some years in work before having children also means that young adults can benefit from the (usually) fast wage increases in their 20s and early 30s. Higher wages for both male and female partners in a couple have been linked to a higher likelihood to have a first child across education levels in Norway, although this link between higher wages and likelihood of a first child has only appeared for recent cohorts among women (Cools and Strøm, 2018[35]).

Dommermuth and Lappegård (2017[37]) found that the three factors that offer the best explanation for the decline in first births since 2010 are economic activity, employment status and the employment rate in the community (municipality). Their results suggested that being out of work reduces the likelihood of having a first child, while the acceleration of the decline in third births was associated with the employment rate in the community. For younger women, the most important driver of reducing the likelihood to have a first child is to be in education. They also find that having longer work experience is more important for women aged under 33 than older women. The effect of women’s income on first births has a j-shape, whereby women with higher incomes experience a higher likelihood to have a first child compared to those with very low incomes, and that this chance increases as income increases. Nonetheless, as pointed out by Comolli et al. (2021[32]) and discussed in more detail in Chapters 1 and 2, the decline and persistency of the low birth rates in the 2010s, cannot be fully explained by the relatively small economic downturn related to the financial crisis of 2008-09.

4.5.2. A cross-national analysis suggests a key role for female employment

Labour markets and fertility choices are tightly linked as childbearing determines human capital accumulation, labour force participation, and occupational choice. At the same time, labour market conditions, such as the number of hours worked, can affect families’ decision of having children. This section presents the results of an OECD-wide regression that estimates the within-country over-time association between labour market outcomes and fertility rates as well as the mean age of mothers at childbirth (Figure 4.9.). As in other chapters of this report, the resulting coefficients should be interpreted as an association between labour market outcomes in a specific country and its respective fertility outcomes. The results do not provide evidence of a causal relationship between labour markets and fertility, but nonetheless provide insights on which policies may be more likely to affect birth rates than others. Based on data availability, all regressions refer to the period 2002-2018. A more detailed methodology is available in Annex 1.B.

As laid out above, economic considerations can have a significant impact on fertility decisions, affecting whether couples can afford to have a(nother) child. The labour market status of women as well as of their partners – both of which are significant determinants of their household’s financial security – can therefore be critical for the decision to be a parent. Indeed, Figure 4.9. shows that increases in employment rates of women are positively associated with increases in fertility and decreases in their mean age at childbirth - along similar, but slightly weaker, effects of male employment on TFRs. These findings are consistent with the fact that countries with higher female employment rates are also among the countries with higher fertility rates (Oshio, 2019[54]), as well as with positive effects on household budgets. However, women who are employed typically also face higher opportunity costs of childbirth as parenthood generally comes with a substantial leave of absence from the workplace. However, as discussed in Chapter 3, more or less comprehensive family policy frameworks have evolved along increasing female labour market participation in most OECD countries, and today substantially reduce the opportunity costs of childbirth, even though negative effects on earnings and career progression remain (see e.g. Kleven et al. (2019[55])).

Figure 4.9. Women’s’ employment plays a key role in timing and number of births

Working hours can have an important bearing on the timing and number of births. Indeed, the international literature corroborates the finding and there are several papers that found a negative link between worked hours and fertility choices for the United States (Maralani and Stabler, 2018[57]; Liu and Hynes, 2012[58]), Italy and the Netherlands (Mills et al., 2008[59]), Italy and Spain (Cooke, 2009[60]). Excessively long working hours may even affect reproductive health itself (see e.g. Ahn et al. (2021[61]) and Gaskins et al. (2015[62])). The OECD-wide regression identifies no significant relationship between either working hours of women or men in full-time contracts (30 hours or more per week) and fertility rates (Figure 4.9), even though the estimated coefficient is rather large. Similarly, there is no discernible effect of the incidence of part-time employment among women on fertility outcomes.

There are a number of other labour market factors that may have an effect on fertility outcomes, but which are not covered in the current regression model (e.g., for a lack of sufficient data, overfitting or potential multicollinearity). For example, higher wages for women may have a positive effect on fertility as it increases financial security, much like employment rates of women itself (see e.g. Berninger (2013[63]) and Hart (2015[64])). Self-employment among women may have negative effects on fertility, mainly because self-employed workers (i.e., small retail, cleaning services) are more likely to face more income uncertainty and may be unable to take advantage of family leave as payroll workers (Adserà, 2004[65]). Moreover, since employers often sub-contract services to self-employed workers to reduce costs, those workers do not necessarily have more working time flexibility to take care of their children. Temporary employment can reduce women’s likelihood to have children, while for men it is particularly unemployment that has adverse effects on fertility (Alderotti et al. (2021[66])).

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Note

← 1. Norway’s good performance on adult education comes from a history of investment. In 2015-2016, the Government stated the aim of developing “a knowledge society where adults that have problems in getting a permanent connection to working life get access to education that gives the skills that working life needs” (Eurydice, 2022[69]; Kunnskapsdepartementet, 2016[70]). Previous aims of working proactively with tailoring skills to reorganised labour market, focusing on inclusivity and lower-skilled and marginalised individuals, should be key in future work as well (Ministry of Education and Research, 2017[67]). It will be important that Norway does not become complacent and continues to attempt to reach those who are currently unwilling to take on learning opportunities that are available and ensure that existing training is well tailored to fulfil labour market needs now and in the near future. Norway could consider continuing updating its National Strategy for Skills Policy for the coming years. Norway designed the Strategy for Skills Policy between 2017 and 2021, jointly between relevant Government Ministries, the Sami Government, social partners and the voluntary sector, to better coordinate skills policy at the local, regional and national level, as the first country to implement the OECD Skills Strategy. It is important to give new governance structures enough time to settle, and to ensure that cooperation, made more efficient where possible, and involve the social partners (OECD, 2020[68]).

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