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Parental Leave Benefits and Child Penalties

Sevrin Waights

No 2016, Discussion Papers of DIW Berlin from DIW Berlin, German Institute for Economic Research

Abstract: I use the universe of tax returns in Germany and a regression kink design to estimate the impact of the benefit amount available to high-earning women after their first childbirth on subsequent within-couple earnings inequality. Lower benefit amounts result in a reduced earnings gap 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 the father pre-birth. Simulations suggest it would take a 50% reduction in the benefit amount to completely eliminate long-run child penalties for sample couples. Lower benefits also reduce take-up of paid leave by mothers, lower the chances of having further children, and have no impact on marital stability.

Keywords: Child penalties; gender inequality in earnings; 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: 45 p.
Date: 2022
New Economics Papers: this item is included in nep-dem, nep-eur, nep-gen, nep-lab and nep-law
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