Care Policies, Time Use and Gender Gaps: A General Equilibrium Analysis

Demographic transitions characterized by declining fertility and aging populations pose substantial challenges to social protection systems globally, particularly regarding the increasing demand for care. In most developing economies, the burden of care falls disproportionately on women with lower education attainment, exacerbating gender gaps in labor participation and wages. This study assesses the macroeconomic and labor market implications of expanding public care policies, including childcare and long-term care. To capture the complex interactions between the care economy and the broader market, we apply a dynamic computable general equilibrium model, using data from Uruguay as an illustrative case study. Our simulations indicate that expanding care policies generates positive multipliers for employment, both within the care sector and the broader economy, leading to aggregate economic growth. However, the analysis reveals that some gender gaps might worsen, suggesting that public care expansion must be complemented by other policies, such as targeted training initiatives and anti-discrimination policies in the labor market.