Social Norms and Mothers' Labor Market Attachment: The Medium-Run Effects of Parental Benefits

Jochen Kluve () and Sebastian Schmitz ()
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Jochen Kluve: KfW Development Bank
Sebastian Schmitz: Freie Universität Berlin

No 8115, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: Increasing mothers' labor supply is a key policy challenge in many OECD countries. Germany recently introduced a generous parental benefit that allows for strong consumption smoothing after childbirth and, by taking into account opportunity costs of childbearing, incentivizes working women to become mothers and return to the labor force rapidly. Using a sharp regression discontinuity design, we estimate policy impacts for up to 5 years after childbirth and find significant and striking patterns. First, medium-run effects on mothers' employment probability are positive, significant and large, for some subgroups ranging up to 10 per cent. The effects are driven by gains in part-time but not full-time employment. We also find significant increases in working hours. Second, the probability of job continuity rises significantly, i.e. mothers return to their pre-childbirth employer at higher rates. Third, employers reward this return to work by raising job quality significantly and substantially. We argue that the policy generated a profound change in social norms: the new parental benefit defines an "anchor", i.e. a societally preferred point in time at which mothers return to work after childbirth.

Keywords: female labor supply; regression discontinuity; parental benefits (search for similar items in EconPapers)
JEL-codes: H31 J13 J22 (search for similar items in EconPapers)
Pages: 39 pages
Date: 2014-04
New Economics Papers: this item is included in nep-dem, nep-eur, nep-lab, nep-lma, nep-ltv and nep-soc
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Citations: View citations in EconPapers (23)

Published - revised version published as 'Back to Work: parental benefits and mothers' labor market outcomes in the medium-run' in: Industrial and Labor Relations Review 2018, 71 (1), 143 - 173

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