Welfare Reforms and the Division of Parental Leave
Thomas Jørgensen and
Jakob Egholt Søgaard
No 9035, CESifo Working Paper Series from CESifo
We study the design of parental leave systems through the lens of an estimated model of parents’ joint willingness to pay for parental leave. We estimate the model using Danish register data on almost 200,000 births combined with sharp variation in economic incentives created by the parental leave beneﬁt system. The estimated model reproduces the empirical distribution of leave, including bunching at kinks in household budget sets and a large share of fathers taking little or no leave at all. We provide a menu of counterfactual policy simulations showing substantial interaction effects between earmarked leave, replacement rates and the duration of leave beneﬁts. For example, introducing 9 weeks earmarked parental leave, as stipulated by a recent EU directive, with a low replacement rate increases the leave of fathers only slightly, while it reduces the leave of mothers signiﬁcantly in our model. Finally, we discuss the efﬁciency costs of different policies aimed at increasing the parental leave of fathers.
Keywords: parental leave; welfare reforms; intrahousehold allocation (search for similar items in EconPapers)
JEL-codes: C54 H31 J13 J22 (search for similar items in EconPapers)
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Working Paper: Welfare Reforms and the Division of Parental Leave (2021)
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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_9035
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