By increasing the number of incoming fellows from 47 in to 98 in and 86 in to the new German Parental Benefit Act (“Bundeselterngeldgesetz”). and introduced a major parental leave reform (‘Bundeselterngeldgesetz’). Meil, G. () ‘European men’s use of parental leave and their involvement in. / Parental Benefits and Maternal Labour Supply: Evidence from The socalled Bundeselterngeldgesetz came into action in January and was .
|Published (Last):||27 September 2007|
|PDF File Size:||13.29 Mb|
|ePub File Size:||10.39 Mb|
|Price:||Free* [*Free Regsitration Required]|
Evidence from Germany Abstract: This paper aims to estimate the effects of a reduction in the size of parental benefits in the second year after birth on maternal labour supply.
§ 10 BEEG – Einzelnorm
I exploit exogeneous variation in the size of benefits that occurred due to reforms of the parental benefit system on the national and federal state level in Germany. The reforms led to reductions in the size of benefits depending on the household type and state. I compare household types that experienced different changes in benefits, even though they are bundeselterngeldgesettz with regard to all relevant characteristics in a differences-in-difference regression matching framework.
My results indicate that there is a robust negative effect of the size of the allowance on maternal labour supply. The estimate for full-time employment is large and close to bundeseltermgeldgesetz significant at the ten percent level.
A focus on a sustainable family policy has led to a number of new reforms and policies designed to ease combining career and family life, while maintaining freedom of choice for families. Parents should be able to choose a childcare mode that they regard most suitable for the development of their child Ristau, Ina major reform of the parental benefit system, modelled on systems in Scandinavia, came into power.
As a consequence, most at least previously employed parents now experience that higher benefits are paid for a shorter period of time. The reform of the national benefit system also triggered adjustments in some federal state policies. Additional to nationwide benefits, four of the sixteen German federal states pay a monthly allowance to parents who decide to stay home in order to care for their children after national bundeselterngeldvesetz have expired. Furthermore, the German government has plans to introduce a home care allowance even at the national level by Augustmaking the federal policies redundant.
It is argued that such allowances are a way to give more freedom to families in their choice of childcare mode and acknowledge the importance of informal work through the attachment of a money value to house work and care.
In contrast, critics claim that an expansion of parental benefits of that type may lead to a reduction in female labour supply. Hence, home care allowances would further complicate reintegration and economic self-sufficiency of mothers on the labour market due to longer absences from work.
Thus, such plans would contradict the aim of the national reform of parental benefits inwhich had been designed to encourage a sooner re-entry to the labour market. In the context of this debate, it is important to evaluate the impact of the recent changes in the benefit systems with regard to parental byndeselterngeldgesetz supply.
Their results indicate that the national reform had the anticipated effects and decreased maternal labour supply 3. However, to my knowledge, bundeselterngldgesetz studies are only concerned with the impact of nationwide reforms, while regional policies, which are in part quite substantial, are mostly neglected.
Parental Benefits and Maternal Labour Supply: Evidence from Germany
Most other studies are concerned with ex-post evaluations. Still, they use data from a health insurance company that is not necessarily representative of the German population.
However, by comparing mothers in the quarter before and after the policy change, they still do not account for the fact that parents in four federal states could still receive benefits in the second year after birth and are thus not influenced by the national reform in the same way.
Hence, it is the aim of this paper to overcome some of the shortcomings of previous studies and assess the effect of the size of monthly parental benefits on maternal labour supply. The focus will be on maternal labour supply as the proportion of fathers staying at home in Germany is low. In order to examine such effects I will exploit variation in the size of parental benefits in the second year after birth that arose due to the changes in the benefit systems both on the national and state level.
A consequence of the national reform was that parents could not longer receive benefits in the second year after their child was born. However, in four of the federal states parents can receive benefits nonetheless due to state legislation.
In all of those states, the exact size of benefits varies by similar household characteristics. As thus, parents experienced differences in the reduction of benefits depending on the state they are living in and the type of household. The type of households is defined by a few characteristics, namely household net income, number of children and age of the eligible child in months.
Since those characteristics can be observed, it is possible to match households that are similar with regard to all factors that simultaneously determine the size of benefits and labour supply, but that nonetheless experienced different changes in the size of benefits.
In order to use this variation for an econometric evaluation, I will employ a difference-in-differences matching estimator similar to the one in Lundin et al. This enables me to estimate the effect of a specific -change on the probability of maternal employment.
Due to regional differences in the legislation and execution of parental benefit, not all federal states in Germany are comparable.
Instead, I will compare identical household types between different regions bundwselterngeldgesetz before and after the reform. My estimates should be unbiased since I can control for all factors that simultaneously determine both the size of benefits and labour supply.
My results indicate that there is a robust negative relationship between the size of benefits and maternal employment. The estimated effect for full-time employment is substantial and bnudeselterngeldgesetz to being significant at the ten percent level throughout specifications. To be precise, a 10 increase in the allowance leads to a 0. The estimates for any employment status are even larger in magnitude, but could potentially be biased.
This problem should however not occur for full-time employment. The paper will be bundeseltrrngeldgesetz as follows. The next section will provide an overview of relevant literature, followed by the theoretical background in section 3. Section bundeselterngeldgesegz includes a presentation of the institutional background. In the methodology part in section 5, I will discuss the empirical strategy used in this paper.
This will be followed by descriptive statistics in section 6. The results of the empirical analysis as well as robustness checks are presented in section 7. In this context, it is important to distinguish between having a parental leave system in place at all, the duration of the guaranteed leave and the size of benefits that are paid, as all three might influence labour supply differently. Generally, the existence of parental leave systems appears to have bundeseletrngeldgesetz positive effect on female buhdeselterngeldgesetz supply.
For instance, the results of studies by Ruhm and Ondrich et al. However, the picture is not as distinct with regard to unpaid leave. Baum finds a small and statistically insignificant effect of the Family and Parental Leave Act fromwhich granted the right to unpaid maternal leave for 12 weeks. This could however be due to the short duration of leave as well as the fact that 5. They find that the introduction of buneselterngeldgesetz leaves of weeks significantly increases maternal employment and job-continuity at the working place previous to birth.
Expansions of leave periods between 29 and 70 weeks are found to significantly prolong the period that mothers stay home after birth and also increase job-continuity for those that were employed previous to birth. In addition, there are numerous studies that investigate how differences in the bundeselteerngeldgesetz of parental leave policies affect maternal labour supply.
Bundesellterngeldgesetz an extension of the model, the impact of the country s respective policy environment on those outcomes is explored. The results vary across countries and time, but Spain and Germany prove to have the highest long-term decline in maternal employment after childbirth.
However, countries like Spain and Italy experienced an increase in the probability of maternal employment after birth, while West Germany maintained a negative trend. Differences in maternity leave duration are not found to be significant explanatory factors of these varying trends, but movements to a dual income tax system, increases in tertiary education and changes in the proportion of part-time contracts seem to be important determinants.
They also make use of a Cox proportional hazard model and find that the rate of return to employment can, to a large extent, be explained by the duration of paid parental leave in both countries. However, the Swedish parental leave system seems to have a greater impact on the behaviour of mothers, which the authors attribute to a greater focus on parental equality and more flexibility.
Their results indicate that an expansion in paid parental leave leads to a significant decrease in return to work; that is one additional month of parental leave leads to an increase in time off work from 0. There are also a few studies examining regional policies that grant additional benefits to parents similar to the policies in the federal states in Germany.
Such allowances exist in Sweden, Norway and Finland. Kosonen makes use of variation arising from 6.
Subsidy towards the cost of professional childcare or extension
He finds that such a supplement has significant negative effects on both labour supply and earned income. An increase of the supplement by per month leads to a 3 percent decrease in female labour force participation. For this group, the implementation of the reform led to a 15 percent decrease in labour market participation.
InSweden was the latest Nordic country bjndeselterngeldgesetz introduce a community-level policy that pays a home care allowance to parents of children between the ages 1 and 3.
In Germany, Ondrich et al. Results indicate that an expansion in paid parental leave leads to a delay in the return to work and, through this delay, also to a shortterm reduction in wages. In the long run, however, they do not find any effects bundeselterngeldgeestz labour supply.
Generally, results are not surprising and indicate that a payment of higher benefits during the first year leads to a decrease in labour supply during that year and an increase in the following year.
They estimate that the reform led to a decrease in maternal labour supply of 4 percentage points during the first year after birth and an increase of 7 percentage points in the second year after birth. The authors use a sample of customers of a health insurance company that is not necessarily representative of the whole population. Additionally, they only observe the intention to return to work in the second year after birth and not bundeselterngeeldgesetz realized status.
A problem with this approach is that the wish to return to work might not coincide with the actual return to work. Finally, Geyer at al.
Thereby, they improve the analysis by using data from the Micro Census. Additionally, they use their results to bundeselterngeldfesetz behavioural predictions from a structural model. They find that the reform led to a decline in maternal labour supply in the first year after birth and an increase in the year thereafter.
Yet, their results indicate that the bundeselterngeldgesstz in the second year after birth is driven by low-income mothers. Still, all of the above mentioned studies focus bundesekterngeldgesetz on an evaluation of the national policy change and disregard the effect of federal regulations, which could potentially lead to bias.
They find that the policy leads to a decline in the use of public childcare by 11 percentage points and a decrease in maternal labour force participation rates by In both cases, the effect is especially strong for low-skilled and low-income households, affecting economically vulnerable families the most. In the case of mothers, that model has some shortcomings as it disregards care for a child as a determining factor in the decision making process.
According to the adjusted model, utility is a function of consumption, leisure and bundeseltsrngeldgesetz quality of the following form: An advantage of this specification is that it can account for preferences in the quality of childcare. A mother tries to maximise utility from consumption, leisure and childcare quality subject to her consumption bundeeslterngeldgesetz.
In a simple model of labour supply, the amount that can be consumed is restricted by a budget consisting of the individual s net income from labour and other non-labour income sources. In the model bndeselterngeldgesetz for young mothers, the price of childcare will be an additional factor reducing consumption. We obtain a budget constraint of the following form: Bunndeselterngeldgesetz price of an hour of external childcare is denoted by p; s e is hours of external childcare and T denotes taxes.
The inclusion of the price of public childcare makes the maximisation problem more complex since a mother s decision to work not only leads to a reduction in leisure, but also to an increase in the cost of childcare.
Similarly, the decision to stay at home leads not only to opportunity costs in the form of foregone labour income, but also to a decrease in costs of external childcare. Furthermore, the total quality of childcare is a function of bundeelterngeldgesetz of external care and the amount of hours in either childcare mode: