IAFFE Annual Conference, Glasgow 27-29 June 2019

1. IAFFE Annual Conference, Glasgow27-29 June 2019 Impact of Investing in Social Care on Employment Generation, Time- and Income-Poverty and Gender Gaps: A Macro-Micro Policy Simulation for Turkey Ipek Ilkkaracan, IstanbulTechnical University KijongKim, LevyEconomicsInstitute TomMasterson, LevyEconomicsInstitute EmelMemiş, Ankara University AjitZacharias, LevyEconomicsInstitute

2. An On-going Research Agenda Economic Returns to Investing in Social Care 1st wave of policy simulations • South Africa - Levy Economics Institute; Antonopoulos and Kim (2008) • U.S.A. - Levy Economics Institute; Antonopoulos, Kim, Masterson and Zacharias (2010) • Turkey – Istanbul Technical University and Levy Economics Institute; Ilkkaracan, Kim and Kaya (2015; 2019) Explore impact of an increase in fiscal spending on social care versus alternative spending (e.g. physical infrastructure, green energy, cash transfers) in terms of short-run, labor demand-side outcomes: • Employment creation (direct and indirect) • Distribution of jobs and income by gender and socioeconomic status • Poverty reduction Findings: • Social care spending generates 2-3 times more jobs (given its labor intensity); • Lion’s share of jobs go to women + job creation for men • Gender employment gap and gender earnings gap narrows down • Higher ‘income’ poverty reduction

3. An On-going Research Agenda Economic Returns to Investing in Social Care 2nd wave ( ONLY macro employment outcome) • 6 high-income OECD, 7 middle- and low-income countries – ITUC studies, de Henau, Himmelweit, Perrons2016 and 2017 • 45 high- and middle-income countries – ILO Care Jobs report; Ilkkaracan and Kim (2018) • Kyrgyzstan – OECD/UN Women, Ilkkaracan, Kim, Ablezova and Abdullaeva (2019) Resonates with macroeconomic policy literature on role of fiscal policy • Monetary policy has limited efficacy in deep downturns; a broad menu of proactive fiscaland industrial policies is essential. Markets won’t create jobs on their own … Industrial and fiscal policies can promote employment (labor intensive industries), reduce inequality, promote stability ….for long-term sustainable growth for emerging markets… Stiglitz2016 in JPM • “… type of public spending matters, not only for welfare implications but also for macroeconomic impact. … Government spending on social services, in particular in care activitiesgenerates much higher multiplier effects on employment.… Given employment challenges associated with structural and technological change, and women’s …unpaid care work, transforming care activities into decent work should become an integral part of strategies aimed at building more inclusive economies.”UNCTAD Trade and Development Report 2017

4. An On-going Research Agenda Economic Returns to Investing in Social Care 3rd wave (employment + jobs/income & time distributional effects; time&income poverty) • Ghana and Tanzania – Levy Economics Institute; Zacharias, Kim, Khitarisvili, Masterson, Nikiforos (2018-2019) • Turkey – Istanbul Technical University, Ankara University and Levy Economics Institute (2019-2020), Ilkkaracan, Kim, Memiş, Masterson, Zacharias Inspired byLIMTIP (Levy Institute Measure of Time and Income Poverty): A combined measure of consumption of commodities and household produced goods and services; 2 components: ‘income deficits’ and ‘time-deficits’ • Argentina, Chile, Mexico; Turkey; S. Korea; Ghana and Tanzania (2010 to 2019; Zacharias, Masterson, Kim, Khitarisvili, Rios-Avilla, Memiş, Esquivel, Antonopoulos) Findings: • Women in employment are prone to higher time-poverty than men • LIMTIP poverty rate higher than official poverty rate (hence ‘hidden poor’) • Access to jobs has limited impact with respect to the LIMTIP measure of poverty than the conventional income measure

5. Economic Impact of Investing in Social Care

6. Research Study on Turkey Objective: To explore impact of public spending on social care expansionon employment generation + access to childcare services and the simultaneous effects on time allocation, time- and income-poverty. • Employment: income + time effects • Job recipients’ income  • but time deficits also  • Access to care services: time effects • Service beneficiaries’ time deficits  • Total Impact: • Income  • but time deficits or ? • Combined net wellbeing impact – An empirical question?

7. Research Study on Turkey Why Turkey? • Dual Jobs Challenge: • Low (female) labor force participation + • High unemployment + disguised forms of unemployment • Gender gaps in the labor market reflected in huge gaps in time-use • A highly underdeveloped social care service sector • Very limited access to childcare centers and preschools • Early Childhood Care and Pre-School Education (ECCPE) • Fiscal expansion plus stimulatory spending throughout 2000’s directed to construction and physical infrastructure, cash transfers and public employment in administration

8. Data and Methodology 1. Macro Estimation of Employment Generation (Input-Output IO Analysis) • 2012 IO Table - Integrate ECEC services as a synthetic sector • Assess care deficit and the required increase in public spending for injection into IOT 2012 • Direct and Indirect (backward linkages and induced) employment 2.Distributional Outcomes of Employment (Micro-simulation) • SILC 2015 – Statistical matching of new jobs to employable individuals • Estimate earnings and employment hours of job recipients • Estimate impact on unpaid work time of other household members 3. Impact of access to ECEC Services on Unpaid Work Time • TUS 2015 – ECEC enrolment variable • Tobit regression to estimate elasticity of ECEC access on unpaid work time • TUS 2015 and SILC 2015 synthetically matched dataset 4. Total employment and ECEC access impact (LIMTIP) • TUS 2015 and SILC 2015 synthetically matched dataset • Assess pre- and post-policy time-deficits and LIMTIP poverty rates

9. How to identify the isolated impact of injections into the care sector? (otherwiseaggregationbias) Synthetic sector method: An estimated cost structure of the ECEC sector is inserted into the 2012 IOT for Turkey. Syntheticsector (ECEC) IO Analysis of Employment Generation HealthandSocialCare Education

10. Micro-simulation for Employment Generation Impact on Income and TimeSurvey on Income and Living Conditions (SILC) .

11. Estimation of Time- and Income Impact of New Services + Employment

12. Measuring Time and Income Poverty LIMTIP (Levy Institute Measure of Time and Income Poverty) Aij = 168 – M – αijRj Time poor: Xij = min (0, Aij – Lij – Tij) < 0 Official poor: Cj < POj PMj = POj – pXj Hidden poor: Poj ≤ Cj < PMj LIMTIP poor: Cj < max (PMj,PMj) iindividual; jhousehold A = time available M = min. time for personal care + non-substitutableHH production (standard for all) R = time for substitutableHH production to subsistatpovertylevel X = time deficit (surplus) L = hours of paidwork; T = commuting time POj = Official poverty line; PMj = Modified poverty line

13. Jobs Simulation - Potential Employable Pool

14. Job Creation Assessment and costing of deficit in ECEC services • Policy targets: OECD average ECEC enrolment rates by age group + Decent employment creation + High service quality • Care deficit: 3.27 million children (new ECEC places) • Required increase in spending: 1.8% of GDP

15. Distribution of Jobs by previous labor market status

16. Distribution of Jobs by education and age

17. Gender Earnings Gap: Job Recipients versus Current SILC

18. Change in Income of Job Recipient Households (%)

19. Decline in Income Poverty of Job Recipient Households (%)(poverty line = 50% of median income)

20. ECEC Simulation - Potential Service Beneficiaries

21. Impact of access to ECEC services on Household Production Time

22. Time Poverty ECEC beneficiaries by employment status

23. Impact of access to ECEC services on Time Poverty of Employedbeneficiaries of newly available ECEC services who are in employment

24. Work in Progress • Revisit TUS-SILC data matching with new TUS data including region, continuous income and age variables. • Recalculate household production thresholds • Confirm initial results re: ECEC impact on time-use of service beneficiaries • Estimate pre- and post-employment time deficits of job recipients • Estimate impact of new employment on other household members’ unpaid work time for new job recipients; • Estimate combined impact of access to ECEC services and new employment on LIMTIP • Focus in on job recipients with small children and new access to ECEC to explore isolated impact of services versus employment; and total impact on time deficits and LIMTIP

25. Conclusions for the time being • Fiscal prioritization of public spending on social care services promises substantial short-run economic returns in the form of: • decent jobs generation particularly for women; • Increasing women’s labor force participation and decreasing women’s and men’s unemployment; • poverty alleviation through income and time effects; • Effects of access to social care services (ECEC in this case) on reducing women’s unpaid work is non-negligible: • Women’s available time increases substantially opening up possibilities for engaging in income generation or other welfare enhancing activity; • But the effect is of limited scope in terms of pulling women in employment – particularly full-time employment - out of time poverty; • Simultaneous activity? • Women taking up other household production activities with relieved time? • Nevertheless two welfare enhancing effects are not accounted for in this analysis: • HH consumption increases including ECEC services • Children’s access to quality ECEC services and lasting effects over the life-cycle

26. References: • Ilkkaracan, I., K. Kim and T. Kaya. 2105: Impact of Public Investment in Social Care: Employment Generation, Poverty Reduction and Gender Equality, (w/ K. Kim and T. Kaya), Istanbul and New York: Istanbul Technical University and Levy Economics Institute. • http://www.levyinstitute.org/publications/the-impact-of-public-investment-in-social-care-services-on-employment-gender-equality-and-poverty-the-turkish-case • Kim, K., I. Ilkkaracan and T. Kaya. 2019. “A Distributional Analysis of the Care Economy in Turkey: Investing in Social Care Infrastructure and Employment Generation”, Journal of Policy Modelling, forthcoming. https://doi.org/10.1016/j.jpolmod.2019.05.002 • Zacharias, A., T. Masterson, F. Rios-Avilla, M. Nikiforos, K. Kim, T. Khitarishvili. 2019. Understanding the Interlocking of income and time deficits for women and men in Ghana and Tanzania: revisiting poverty measuremenr, rethinking policy responses, Levy Economics Institute. • Zacharias, A., T. Masterson, E. Mamiş. 2014. Time Deficits and Poverty – LIMTCP for Turkey, Levy Economics Institute..