Parental Leave Benefits and Gender Inequality: Evidence from a Benefits Cap for High-Earning Mothers

Sevrin Waights

No 67, Berlin School of Economics Discussion Papers from Berlin School of Economics

Abstract: I use the universe of tax returns in Germany and a regression kink design to estimate the impacts of mothers' parental leave benefit amounts on couple earnings inequality. I make use of a benefits cap to estimate the causal impacts for high-earning women; a group for which earnings inequality is particularly large. A lower mothers' benefit amount results in a reduced gender gap in earnings that persists beyond the benefit period for at least nine years after the birth. The longer-term impacts are driven by couples where the mother earned more than her partner pre-birth. Simulations suggest that a 10% reduction in the benefit amount could reduce long-run child penalties in sample couples from 63 to 43%.

Keywords: Child penalties; gender inequality in earnings; high-earning women; social norms; parental leave policy; regression kink design (search for similar items in EconPapers)
JEL-codes: D63 H31 J13 J16 K31 M52 Z13 (search for similar items in EconPapers)
Pages: 80 pages
Date: 2025-06-17
New Economics Papers: this item is included in nep-dem and nep-eur
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Persistent link: https://EconPapers.repec.org/RePEc:bdp:dpaper:0067

DOI: 10.48462/opus4-5860

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