Domestic services and female earnings: panel microdata evidence from a reform

Karin Halldén, Swedish Institute for Social Research (SOFI)
Anders Stenberg, Stockholm University

Housework and family responsibilities are commonly assumed to be one of the major sources behind the observed gender earnings gap. While partly malleable to policy, there is little direct evidence on if/how minor reliefs in routine housework duties affect female earnings. A reform in Sweden in 2007 reduced the price of domestic services by 50 percent. Using population register data 2000-2010, we explore the variation across years in household tax discounts for domestic services to analyze the impact on annual earnings. We find significantly positive earnings effects for females in households outsourcing roughly between 50 and 150 hours of domestic work per year, but the average effects do not increase if the household uses above 150 hours per year. “Placebo” estimates indicate that results do not reflect earnings trends. Hence, a causal interpretation of the results is supported.