Background:

Chile is a paradoxical case in its economic performance in recent decades. Although this country has implemented significant pro-market modernization reforms, it has an unexpectedly low female participation rate, wasting a vital source of economic growth. Several studies indicate that the cause of this low female labor participation in Chile would be a low conciliation between labor and family life. This experience is an important lesson for other developing economies that want to implement similar reforms.

Methodology:

In this article, we estimate a general equilibrium model by using Bayesian econometrics to quantify the effects of work-family conciliation at the aggregated level, through the effect of childcare.

Results:

Taking the case of Chile, we estimate important gains in increasing conciliation levels due to an increase in productivity rather than an increase in the labor supply.

Conclusions:

The main economic policy consequence for other developing or emerging economies is that higher levels of conciliation have important effects on economic activity, exceeding the financing costs.