Parental Allowance Increase and Labour Supply: Evidence from a Czech Reform

Jakub Grossmann, Filip Pertold and Michal Šoltés

CERGE-EI Working Papers from The Center for Economic Research and Graduate Education - Economics Institute, Prague

Abstract: We study the effect of a CZK 80,000 (36%) increase in parental allowance, a universal basic income-type benefit, on the labor supply of parents in the Czech Republic. Drawing a parental allowance does not preclude labor market activity, which allows us to study the income effect. After the reform, mothers substantially prolonged the average period they drew an allowance. The labor market participation of mothers of young children decreased by 6 percentage points (15%). The estimated effect corresponds to a non-labor income labor supply elasticity at the extensive margin of about -0.5. The effect is particularly strong among mothers with their first child (10 p.p. or 28%) and among university-educated mothers (16 p.p. or 36%). We observe a virtually identical reduction in hours worked. We found no effect on the labor supply of fathers.

Keywords: Parental allowance; Maternal labor supply; Income effect of social policy; Czech Republic (search for similar items in EconPapers)
Date: 2023-02
New Economics Papers: this item is included in nep-lma and nep-tra
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Related works:
Journal Article: Parental allowance increase and labor supply: Evidence from a Czech reform (2024)
Working Paper: Parental Allowance Increase and Labor Supply: Evidence from a Czech Reform (2023)
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