Mexico Could Gain US$391 Billion by Boosting Female Workforce

Mexico could boost its GDP by US$391 billion, or 25%, if female workforce participation matched male levels, according to a Milken Institute report released on Aug. 20, 2024. The report emphasizes that improving access to childcare is crucial to achieving this economic boost.

Currently, only 45.6% of working-age women in Mexico are employed, compared to 77.5% of men. The report identifies this disparity as a significant economic growth opportunity, noting that aligning female employment with US levels could add US$132 billion to Mexico’s economy. Addressing the primary barrier of inadequate child care is essential for increasing female workforce participation.

President Claudia Sheinbaum's plan to reinstate early education centers aligns with this need by aiming to enhance childcare accessibility. This initiative could help overcome the main obstacle to higher female employment, potentially unlocking substantial economic benefits for Mexico, reports Reuters. 

"The number one thing that keeps women out of the workforce is infant care and childcare," states Maggie Switek, Lead Researcher. The report also identified Mexico as having one of the highest "child penalties," which refers to the negative impact on a parent’s earnings and career prospects due to having a child. For women, this often results in reduced income, career progression, and employment opportunities compared to men, who may actually experience wage increases and career benefits after becoming fathers.

MBN reports men with children experience a 15% higher median pay compared to those without, exacerbating the financial strain and potential career limitations for working mothers. This discrepancy, known as the "fatherhood wage premium," occurs because men often increase their work hours and receive bonuses upon becoming fathers. This phenomenon reflects the capitalist notion that fathers, as primary breadwinners, deserve higher pay, further entrenching the economic disparities between genders.

To address this issue, the report advocates for expanding high-quality, low-cost childcare options, citing successful examples from Japan as models for potential implementation in Mexico. Access to affordable, quality childcare can enhance women’s employment outcomes by enabling them to work outside the home, transition to more desirable work, or increase productivity in their businesses, reveals Poverty Action Lab. Nearly 60% of parents who are not working full-time indicated that if they had access to affordable, quality childcare, they would opt for full-time work, reports CAP 20. 

With nearly 65% of Mexican women expressing a desire to work, either solely or alongside home responsibilities, and 78% of men supporting increased female workforce participation, the economic potential is significant. The Milken Institute report underscores the urgent need for policy changes to enhance female labor force participation and unlock substantial economic growth for Mexico.