The complementary role of national family policies and education in dealing with skills shortage in Europe’s knowledge economies

While women tend to remain in education for longer and have the skills necessary in today’s knowledge economies, they are also at a higher risk of (partial) withdrawal from the labour market and career breaks that tend to lead to skills demotion. This paper studies the role of investments in early childhood education and care (ECEC) services in mitigating the negative effect of parenthood on women’s income loss and occupational status demotion across 30 countries in Europe. It contributes to the discussion of the complementary role of ECEC investments as part of a broader national policy to deal with skills shortage. Three levels of educational attainment are considered: low skilled, average (secondary educational attainment), and highly skilled (tertiary education). The theoretical expectation is that policies supporting work-care reconciliation help maintain the income position among (lower) middle classes during life transitions that entail higher risks of career breaks and sliding down the socioeconomic ladder, such as parenthood. The theoretical framework builds on social investment literature combined with social mobility theory, allowing for differential risk of status demotion across individuals of different skill levels. The advanced hypothesis is that higher work-care reconciliation policy efforts lead to lower status demotion especially for individuals with average skill levels, i.e. those with a higher risk of status demotion. Analyses draw on micro-level data from longitudinal EU-SILC surveys 2005–2020 from 30 countries, using mixed-effects dynamic panel regression models, combined with aggregate macro-level indicators on family policies. The analytical sample comprises working-age adults followed for two to four years. The longitudinal design allows capturing household income position and employment status before childbirth and up to two years after this event. Individuals’ educational attainment is used as a proxy for skill level and social class position. Preliminary findings show that higher ECEC investments are weakly associated with changes in the risk of income loss for low and highly educated individuals, but have a substantial moderating effect for those with secondary education (the largest of the three categories of skills levels). This has implications for how (and for whom) social policies interact with education in dealing with skills mobilization and preservation during life transitions such as parenthood. Findings point at the importance of coordination between education and other social policies in addressing skills shortages.