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Back to work or stay at home? Family policies and maternal employment in Finland

Eva Österbacka () and Tapio Räsänen ()
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Eva Österbacka: Åbo Akademi Universtiy
Tapio Räsänen: Kela Research

Journal of Population Economics, 2022, vol. 35, issue 3, No 9, 1101 pages

Abstract: Abstract The employment effects of family policies depend on the mother’s labor market attachment and on the age of the child. We study the effects of child home care (cash-for-care) and private day care allowances on mothers’ return to employment after childbirth. Our identification strategy exploits changes in municipal-level subsidies. We find that higher private day care allowances have no effect while higher home care allowances increase the length of home care. A 100-euro higher level of home care allowance prolongs home care by 2–3 months, on average. The home care allowance combined with low labor market attachment and low earnings potential pre-birth delay the return to employment. However, the effect of the allowance diminishes over time. Higher subsidies have no impact by the time a child turns two. Reductions in subsidies stimulate a faster return to employment.

Keywords: Maternal labor supply; Child-care subsidies; Family policy; Gender equality (search for similar items in EconPapers)
JEL-codes: J13 J16 J18 J22 (search for similar items in EconPapers)
Date: 2022
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DOI: 10.1007/s00148-021-00843-4

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