Mexico’s Economic Future Tied to Increasing Women’s Workforce Participation

A recent report estimates that Mexico could increase its annual economic activity by over 25%, or $390.5 billion if women participated in the labor force at the same rate as men. Improving access to childcare is critical to unlocking this potential.

Mexico, Latin America’s second-largest economy, is at a pivotal moment. A recent report by the U.S. think tank Milken Institute suggests that the country could see a significant boost in its economic output—by more than 25%, or $390.5 billion annually—if women participated in the workforce at the same rate as men. The report highlights the vast economic potential that remains untapped due to the gender gap in employment.

According to World Bank data cited in the report, only 45.6% of working-age Mexican women are employed, compared to 77.5% of men. This disparity not only reflects a significant social issue but also represents a massive missed opportunity for economic growth. If Mexico could raise female employment levels to match those in the United States, where 57.3% of women were working in 2023, it would add an estimated $132 billion to the national economy.

The implications of these numbers are staggering. With an economy still recovering from the global pandemic and facing various structural challenges, Mexico stands to benefit immensely from increased female participation in the labor force. Beyond the immediate financial gains, this shift could also lead to broader social benefits, including improved family incomes, reduced poverty rates, and enhanced social cohesion.

However, the road to achieving this potential is fraught with challenges. One of the most significant barriers to women entering and remaining in the workforce is the availability and accessibility of childcare. The report makes it clear that without addressing this issue, efforts to close the gender gap in employment will remain largely ineffective.

Childcare: The Major Barrier to Female Employment

The report identifies childcare as the primary factor keeping women out of the workforce. In Mexico, the impact of having a child on the male-to-female employment ratio is among the highest in the world. This “child penalty” is a critical issue that exacerbates gender inequality in the labor market, making it difficult for women to balance their roles as caregivers and professionals.

For many Mexican women, the lack of affordable, high-quality childcare options forces them to choose between working and staying home to care for their children. This decision is often not a choice at all but a necessity, dictated by the absence of supportive infrastructure. As a result, many women who would prefer to work, either full-time or while managing household responsibilities, are unable to do so.

The report emphasizes the need for Mexico to invest in expanding access to childcare as a clear public policy priority. The expansion of high-quality, low-cost childcare services is not just about enabling women to work; it is about recognizing the critical role that childcare plays in the broader economy. By providing reliable childcare options, Mexico can create a more inclusive labor market that allows both men and women to participate fully.

Learning from International Successes

The Milken Institute report points to Japan as a successful model for expanding female labor force participation through targeted childcare policies. Japan, like Mexico, faced significant challenges in increasing female employment due to cultural expectations around gender roles and caregiving responsibilities. However, by implementing policies that expanded access to affordable childcare, Japan was able to make significant strides in bringing more women into the workforce.

Japan’s experience offers valuable lessons for Mexico. One of the key takeaways is the importance of government involvement in the provision of childcare services. In Japan, the government played a central role in expanding childcare infrastructure, ensuring that services were both accessible and affordable. This approach not only helped to increase female labor force participation but also supported broader economic growth.

For Mexico, adopting a similar approach could yield substantial benefits. By investing in childcare infrastructure, the government can reduce the barriers that prevent women from working, thereby tapping into a vast pool of talent that is currently underutilized. Moreover, expanding childcare services would also create jobs within the sector, further contributing to economic growth.

The report also highlights the importance of cultural change in supporting female employment. In Japan, alongside the expansion of childcare services, there was a concerted effort to challenge traditional gender roles and promote the idea that both men and women can contribute to both the workplace and the home. In Mexico, where traditional gender norms remain strong, similar cultural shifts will be necessary to fully realize the economic potential of increased female labor force participation.

The Role of Policy and Leadership in Shaping the Future

The upcoming presidency of Claudia Sheinbaum, who is set to become Mexico’s first female president in October, offers a unique opportunity to address these issues. Sheinbaum has already indicated her commitment to supporting women in the workforce by promising to reinstate “early education centers” run by the government. These centers, which provide essential childcare services, were a lifeline for many working mothers before they were closed in recent years.

Sheinbaum’s leadership could be pivotal in advancing policies that promote gender equality in the labor market. Her administration has the potential to implement comprehensive reforms that address the systemic barriers women face, including the expansion of childcare services, support for working mothers, and the promotion of workplace flexibility.

In addition to government action, there is a growing recognition among Mexican men of the importance of female participation in the workforce. According to the Milken Institute report, 78% of men surveyed said they would prefer women to be working, either exclusively or while also taking care of their homes. This shift in attitudes is encouraging and suggests broad support for policies that enable women to work.

However, achieving meaningful change will require more than just supportive policies and attitudes. It will also require a concerted effort to enforce existing laws and regulations that promote gender equality. Mexico has made significant progress in recent years, but challenges remain, particularly in ensuring that women have access to the same opportunities as men in the labor market.

The report underscores the importance of legal certainty and the rule of law in creating an environment where women can thrive. This includes ensuring that women are protected from discrimination in the workplace and that they have access to the same legal protections as their male counterparts. By strengthening the legal framework around gender equality, Mexico can create a more level playing field for all workers.

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The Milken Institute report highlights the significant economic benefits that Mexico could achieve by increasing female labor force participation. By addressing the barriers that prevent women from working, particularly in the area of childcare, Mexico can unlock a vast pool of talent that has the potential to drive economic growth. The upcoming presidency of Claudia Sheinbaum offers a unique opportunity to implement the necessary reforms and create a more inclusive and equitable labor market. With the right policies in place, Mexico can move towards a future where both men and women can contribute fully to the country’s economic success.