Nordic ‘Glass Ceiling’ Shows How Gender Equity Suffers From Government Overreach

Nordic countries beat the United States at a host of measures related to gender equality. But while this is widely believed to be an effect of their social welfare policies, ample data suggest that women in these countries thrive in spite of heavy-handed government policies, not because of them.

"While Nordic societies are indeed role models when it comes to gender equality, this equality stretches back centuries before the modern welfare state and reflects traditional Nordic culture," writes Nima Sanandaji in the intro to a new look at the "glass ceiling" in Nordic countries.

In analyzing the effects of corporate gender quotas and other popular Nordic policies, Sanandaji—a Kurdish-Swedish policy analyst and the president of the European Centre for Entrepreneurship and Policy Reform—observes what a good deal of recent scholarship has been showing: that "the rise of the Nordic welfare state has been a double-edged sword" for feminism, "creating some benefits for women's careers, but also creating barriers to women's professional progress."

Nordic countries can trace some of their workforce quirks to their large public sector, which "has been both positive and negative for women," writes Sanandaji:

It played an important historical role in women's entry into the labor market because many women entered through the expanding public sector. Public-sector services also facilitated the combination of work and the fulfilment of family responsibilities. The expansion of the public sector partly explains why Nordic nations reached a high employment rate among women earlier than other Western countries and stayed that way. The provision of public daycare was particularly important in this regard.

But labor-force participation is only one measure of female professional success. Another measure is female business ownership. Anita Lignell Du Rietz studied women's business ownership in Sweden and found that many businesses, including taverns, tailor shops, breweries, and stores were run by women entrepreneurs during the 19th century. Over time, women dominated businesses such as schools and pharmacies.

However, government monopolies crowded out private enterprise as the Swedish welfare state grew during the 20th century. Meanwhile, male-dominated sectors, including manufacturing, mining, and forestry, remained under private control. The transition toward welfare-state monopolies meant that women's business ownership suffered.

Government monopolies have combined with a strong influence of union wage-setting to undermine incentives for work: wages in the female-dominated public sectors in Nordic countries are flat, and rise based on seniority rather than achievement. Although there are public-sector managerial positions, the opportunities for individualized careers and business ownership are comparatively limited.

Women in Nordic countries are less likely to hold management positions as their U.S. counterparts, according to data from the International Labour Organization, from 15 percent less in Denmark to three percent less in Iceland.

Sanandaji finds that high taxes, mandated paid-leave policies, and the high cost of paid services also impede Nordic women's professional advancement. Overall, he concludes, "Nordic public-sector monopolies, tax policies, and welfare and family policies, along with ineffective gender quotas, combine to create the Nordic glass ceiling." (Read the whole paper here.)

In a recent Bloomberg column, Megan McArdle pinpointed another factor that taxes women in certain Nordic countries (who still, like their American counterparts, wind up doing an uneven share of domestic labor and child care): "High Danish wages translate into sky-high costs, especially for services. At a McDonald's in downtown Copenhagen, a Big Mac meal set me back more than $10."

McArdle came away from her trip to Denmark noting that Danes' complaints about their countries are generally, "on the scale of things, reasonably minor problems. They can be fixed. Moreover, there's some chance that they will be fixed because Denmark's political culture is remarkably effective at tackling problems that have stymied the rest of the world." But we can't import their policy and wind up with the same sense of well-being, suggests McArdle, because much of this comes from Danish social cohesion and "a consensus-based culture founded on trust."

Again, there are good and bad sides to this. While "Danish social cohesion works great for Danes," it's not so great for absorbing outsiders:

In the U.S., the unemployment rate of foreign-born workers is almost a percentage point lower than that of native-born citizens. In Denmark, it's almost 6 percentage points higher, more than double the native-born rate. And many first-generation immigrants also seem to be having difficulty integrating themselves into the Danish economy.

A combination of factors—including discrimination but also a fetishization of training and education—make it hard for immigrants to get ahead in the Danish economy. As with policies to encourage gender parity, Nordic-style heavyhandedness in employment (and sex) can come with unintended consequences that hit the most vulnerable the hardest.