Female labour force participation, fertility and public policy in Sweden.

2nd only to Ireland in total fertility, Sweden has the highest total fertility (TFR) and female labor force participation rates (FLFPR) among European countries in the late 1980s and early 1990s. 1988 TFR and FLFPR were 1.96 and 80.1%, respectively. This paper considers the role of public policy in creating this unique trend, with particular focus on family leave policy. In 1974, Sweden became the 1st country to allow leave to both parents following childbirth. By 1990, leave duration had grown from an initial 6-month period to 15 months. In addition, subsidized day care, flexible working hours, and economic support to families with children is provided in the context of a family-supportive tax structure. While generous, benefits are related to work and income history. Labor income is replaced at 90% of gross earnings, while the unemployed receive only minimal taxable flat payments. Benefits overall are paid from general taxes. Given that benefits reflect job history and income, and income level tends to rise fastest in the initial stages of employment, women in Sweden postpone childbirth in order to realize wage increases and greater job standing over the short- to medium-terms. In sum, Sweden's policies stimulate both fertility and women's paid work by reducing the costs of having children while requiring parents to be employed to receive full benefits. This paper further reviews the development of parental leave and related policies and compares Swedish fertility, female labor force participation, and parental leave benefits to those of countries in the European Community.