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Long-Run Effects of Incentivizing Work After Childbirth

Elira Kuka and Na'ama Shenhav
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Elira Kuka: George Washington University, IZA, and NBER

Working Papers from The George Washington University, Institute for International Economic Policy

Abstract: This paper uses a panel of SSA earnings linked to the CPS to estimate the impact of increasing post-childbirth work incentives on mothers’ long-run career trajectories. We implement a novel research design that exploits variation in the timing of the 1993 reform of the Earned Income Tax Credit (EITC) around a woman’s first birth and in eligibility for the credit. We find that single mothers exposed to the expansion immediately after a first birth (“early-exposed†) have 3 to 4 p.p. higher employment in the 5 years after a first birth than single mothers exposed 3 to 6 years after a first birth (“late-exposed†). Ten to nineteen years after a first birth, early-exposed mothers have the same employment and hours as late-exposed mothers, but have accrued 0.5 to 0.6 more years of work experience and have 6 percent higher earnings. Incorporating long-run effects on EITC benefits and earnings increases the implied marginal value of public funds (MVPF) of the expansion. Our results suggest that there are steep returns to work incentives at childbirth that accumulate over the life-cycle.

Keywords: child penalty; EITC (search for similar items in EconPapers)
JEL-codes: H2 J16 J31 (search for similar items in EconPapers)
Pages: 99 pages
Date: 2020-10
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