Estimating the impact on potential output of structural reforms to increase the female participation rate

Abstract

This paper estimates the impact of structural reforms aimed at increasing the female participation rate on potential output in Malta. Albeit starting from a low level, the female participation rate in Malta increased by 11.7 percentage points between 2008 and 2014, by far the highest increase registered among EU countries. Females accounted for almost all the increase in full-time employment between 2008 and 2014 and to around two-thirds of the increase in part-time employment. The trend increase in participation is estimated to have contributed, on average, to 0.8 percentage points per annum to potential output between 2008 and 2014. The headline increase in the female participation rate is adjusted to account for changing demographics and the education attainment of the workforce. The median of the various estimates presented in this note – based on an aggregate approach and a cohort model of labour participation – suggests that slightly less than half of the headline increase in the female participation rate is attributable to reforms. Overall, the impact of the various reforms is calculated to have raised the economy’s potential output growth by 0.3 percentage points per annum since 2008.