Quotas Matter: The Effect of Gender Quota Laws on Work-Family Policies with Ana Catalano Weeks

Gender quota systems, though controversial in the US, have proliferated in over 50 countries. In parliamentary elections, quota laws require a certain number of women to be on the party lists for all political parties. Quotas can have a significant effect on female political representation – in one election cycle in Portugal, female representation increased from 21% to 27%. But are these increases indicative of real change, or just “window dressing”? What effect do quota laws have on policy, and under what conditions? This week’s WAPPP seminar featured Ana Catalano Weeks, WAPPP Fellow and College Fellow in the Department of Government at Harvard University, as she discussed her research on the effects of gender quota laws on work-family policies.

In order to assess these questions, Ana examined data from Italy, Belgium, France, Spain, and Portugal. She limited her research to advanced democracies, as her theory is dependent on men and women having different policy preferences – i.e., women prefer spending more on social policy programs compared to men – which is less true in developing countries. She found that quotas are especially likely to lead to policy changes in areas in which there is a gender gap in preferences, and particularly in areas that don’t align with the main left-right dimension in politics (that is, issues that aren’t well-described by economic or class-based cleavages in politics).

Previous literature indicates that quotas are effective at increasing the share of women in office. While there is a great deal of work on the preliminary stage of quotas, getting women elected, there is less data on how gender matters for legislative behavior. Evidence that greater female representation translates into specific policy outcomes is rare. One notable exception is a study of political reservations in India, which found that female leaders were more likely to invest in resources that women favor, such as water and roads. However, it is not clear that the same outcomes will translate to advanced democracies, particularly because of the party system, and the mechanism between female political representation and policy outcomes remains unclear.

The key argument in this case is that after implementation of a quota law, policies are likely to shift in the direction of women’s preferences, especially for issues that are orthogonal to left-right dimensions in politics. Women face high barriers to entry into politics, be it because of discrimination or an “ambition gap.” Quota laws that increase the number of women in office should also increase the representation of their political priorities. Ana argues that absent women’s presence, political parties have little incentive to address orthogonal issues: such issues are cross-cutting, which may split the party’s traditional constituencies and cause conflict, detract from the party’s signature issues, and are not recognized by primarily male party elites to offer electrical opportunity. Quotas solve this problem by requiring parties to include women, who are more likely to care about these issues and be able to point out the electoral opportunities they present.

Ana posits two possible mechanisms for this effect. It may be that as quotas increase the number of women in parliament, these women act like any faction within the party. More people within the faction means more leverage, which leads to policy change. However, it may also be that the quota law and the debate around it raises the salience of these issues in public discourse, and this increased attention alone can lead to policy change.

The data confirm what we already know about gender gaps in preferences (women tend to prefer more social spending and government intervention than men). The biggest gender gap in social policy has to do with working mothers. When asked whether “preschool children are likely to suffer when the mother works,” across countries and over time 30% of men disagreed, compared to 39% of women. This gender gap is increasing over time: greater proportions of both men and women are disagreeing, but women are disagreeing “faster.” These gender gaps increase with education and persist across political parties. An exploratory factor analysis confirmed that work-family policies are actually orthogonal to the main left-right political dimension. While the latent underlying ideas around redistribution and work-family policies were correlated, they were not a result of the same underlying factor.

This preliminary work generated three key hypotheses. First, that quota laws will lead to an increase in spending on child care and parental leave. Second, quota laws will lead to a decrease in spending on family allowances, sometimes called child benefits, that are typically motivated by concern for fertility rates and that are designed to make it easier for women to stay at home. Finally, we should expect to see a larger change in spending in areas that exhibit a large gender gap in policy preferences.

Ana examined OECD social expenditures data, which allowed her to operationalize spending on child care, parental leave, and family allowances. She included controls for the number of women already in parliament, women in the labor force, GDP, party quotas, union density, fertility rate, EU membership, and overall social spending. Her methodology included two-way fixed effects models comparing changes within quota countries, along with a series of placebo regressions that set the date of the quota law’s implementation back to see if another factor in the law’s effective date was responsible for the result.

The results of the study confirm the first two hypotheses: gender quota laws were associated with increased spending on child care and decreased spending on family allowances. Given that overall spending remains about the same, there is a major shift in funding from family allowances to child care. These changes in spending are sizable: data from France showed a $500 increase in spending per child on child care, compared with $300 less per child on family allowances. In a smaller state like Portugal, there was a small increase per child in child care, around $40, and also small decrease in allowances per child, approximately $125. These effects are conditioned by the gender gap in each country. A larger gender gap in preferences leads to a bigger change in the amount of money spent on child care versus family allowances.

Robustness checks demonstrated that the results are actually an effect of the quota law rather than an artifact of the model or due to some other contemporaneous factor. Quotas did not affect issues not characterized by a gender gap, nor was there an effect between quotas and spending on issues well situated on the main left-right dimension.

Qualitatively, Ana compared the case of Portugal, which had a quota law at the time, with Italy, which had a quota law up for debate and chose not to pass it. Though both countries were in a period of major economic depression and austerity, they handled family policy budgeting very differently. Italy increased family allowances and new birth grants while decreasing funding for child care. By contrast, Portugal started a program to build 400 daycare centers, passed a law creating a right to preschool for children over the age of four, and eliminated family allowances for the top two income groups.

What was the mechanism at work in these changes? Interviews with policymakers in each country indicated that while there was little evidence that women acted differently in parliament, quotas did give women more leverage to push party leaders on their different priorities. However, there was also support for the second hypothesized mechanism. Party leaders began to champion gender-related issues, partially as a way of credit-claiming and partially because many leaders feared looking outdated or backwards. Interestingly, these changes persisted even when right-wing parties took over the government. While there is evidence for both mechanisms, it appears that they are not as distinct as initially theorized – when there are more women in office who have greater leverage, the salience of their policy priorities is also greater.

In conclusion, the results of quotas are not just window dressing: quotas increase the substantive representation of women’s interest. Quotas shift legislative priorities toward policies that help parents combine work and family. Importantly, this indicates that identity matters even in parliamentary democracies. However, there are many more questions left to answer, including how budgetary changes affect real people’s lives. We look forward to hearing more from this exciting line of research!

Changing the Face of Corporate Governance

In an attempt to promote gender diversity on corporate boards, a number of countries including Norway, France and Spain have adopted quota-based models. According to constitutional lawyers, such a model has no chance in the United States. So when large institutional investors lobbied the Securities and Exchange Commission (SEC) to collect information about corporate board diversity practices, the US adopted a disclosure-based approach to the issue.

In 2010, the SEC began to require publicly traded companies to disclose in their proxy statements certain information about diversity considerations in board nominations. A proxy statement is a special report sent to shareholders in advance of the company's annual meeting.

Aaron Dhir, Associate Professor of Law at the Osgoode Hall Law School at York University, combed through the proxy statements of all S&P 100 companies for 2010 and 2011. Two years is not enough time to actually see board composition changes, but Dhir’s qualitative and quantitative content analysis presents a picture of the corporate response so far and raises questions about the efficacy of the SEC rule as a nudge toward greater board diversity.

In contrast to the command and control quotas, the idea behind more subtle nudge-based new governance models is that behavior can be changed by regulations that facilitate reflection by senior executives upon diversity and disclosure of relevant outcomes to the interested public. The approach takes longer to bear results than a simple requirement would, but it is supposed to facilitate change that is perceived less as an imposed burden and more as an organic development.

Under the 2010 SEC rule, annual proxy statements had to include whether the board nominating committee considered diversity in director nominations, if so, how the consideration was made, and if there was a board diversity policy then how this policy was carried out and evaluated.

The SEC did not provide any particular definition of diversity. As a result, Dhir found that the vast majority of companies considered diversity in terms of experience. Some of them considered demographic factors alongside the experiential diversity, but a number of firms limited the discussion at experience, which is, arguably, something that any board would do without any rules. So while the SEC regulation shed light on corporate board practices, it may not have changed those practices in any appreciable way.

Berkshire Hathaway Board of Directors, photo by Gregg Segal, CNN Money

Further bringing into question the rule’s efficacy as a “nudge” is Dhir’s finding of very little change between 2010 and 2011 statements. Ongoing reflection about board diversity would, presumably, be reflected in some kind of practice change from year to year, but it seems like in this case the rule prompted creation of a boilerplate language to be used and re-used. This raises another troubling question – if the rule simply allows corporations to “check the box” on diversity, then it may actually inhibit meaningful progress.

While the spirit of the rule is arguably to foster greater corporate diversity, the letter of the rule as it currently stands does not push companies to change their practices in any way. In fact, it even allows for responses like Berkshire Hathaway’s:

“In identifying director nominees, the Governance, Compensation and Nominating Committee does not seek diversity, however defined.”

Since the rule does not require companies to consider diversity, just to disclose whether or not they do, BH's response is completely appropriate.

This is where the shame factor comes in. For a disclosure-based policy to be effective in changing behavior there has to be an internalized social norm that certain responses will be met with disapproval. However, if there is no such social norm then the disclosure is meaningless.

Dhir argued that while the importance of diversity has been recognized by corporations on an operational level, this mentality has not yet permeated the thinking of boardrooms about their own diversity situation. Several audience members went further, positing that diversity is not even a broadly recognized social norm in the U.S.

Having engaged in discussions on the matter and read comments on articles dealing with race and gender, I recon more Americans would endorse some notion of meritocracy than embrace the intrinsic value of diversity.

To change the face of corporate governance, I believe we need not only a stronger nudge from the SEC, but also more pressure on companies from the institutional investors who pushed for the rule from the beginning. (Like this "Say No to All-Male Boards" campaign). We also need to see more research from organizations like Catalyst, demonstrating that diversity is a smart business practice. Perhaps with a concerted effort we can convince enough people to tip the balance toward making diversity a widely-held social norm.

Anya Malkov is an MPP candidate at the Harvard Kennedy School, a WAPPP Cultural Bridge Fellow, and an alumna of From Harvard Square to the Oval Office.