Efficient Intra-Household Allocation of Parental Leave

Juliane Parys () and Gregor Schwerhoff
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Juliane Parys: McKinsey&Co

No 5113, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: We propose a model of how parents resolve conflicts about sharing the negative short and long-term consequences from parenthood-related career interruptions on earnings. We introduce childcare sharing in a collective model of household behavior with public consumption as in Blundell, Chiappori, and Meghier (2005). Conceptually, the solution to the household problem can be thought of as a two-stage process: Parents first agree on public expenditures on professional childcare; then, conditional on the level of public consumption and the budget constraint stemming from stage one, parents determine their individual job absence durations and private consumption shares. Using relative income measures from German parental benefit data as distribution factors, we find evidence for Pareto efficiency in childcare sharing. More precisely, households with higher total incomes purchase more professional childcare, and changes in distribution factors shift the conditional parental leave allocation in favor of the partner whose relative income increased.

Keywords: conditional sharing rule; collective model; childcare; intra-household allocation (search for similar items in EconPapers)
JEL-codes: D13 J12 J13 (search for similar items in EconPapers)
Pages: 46 pages
Date: 2010-08
New Economics Papers: this item is included in nep-lab
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Citations: View citations in EconPapers (3)

Published - published in: Canadian Journal of Economics, 2018, 51 (1), 236 - 27

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