Now Daddy's Changing Diapers and Mommy's Making Her Career - Evaluating a Generous Parental Leave Regulation Using a Natural Experiment

Jochen Kluve and Marcus Tamm

No 145, Ruhr Economic Papers from RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen

Abstract: Over the last decades many OECD countries introduced parental leave regulations in order to counteract low and decreasing birth rates. In general, these regulations aim at making parenthood more attractive and more compatible with a working career, especially for women. The recent German Elterngeld reform is one example: By replacing 67 per cent of prepartum parental labor earnings for up to 14 months after birth of the child - if both father and mother take up the transfer - it intends to i) smooth or prevent households' earnings decline postpartum, ii) make childbearing attractive for working women while iii) keeping them close to the labor market, and iv) incentivize fathers to participate in childcare. We evaluate the reform by using a natural experiment created by the quick legislative process of the Elterngeld reform: Comparing outcomes of parents with children born shortly after and before the coming into effect of the law on 1 January 2007 yields unbiased estimates of the reform effects, because at the time when these children were conceived none of the parents knew that the regulation would be in force by the time their child is born. Our results are based on unique data from the official evaluation of the reform, which we conducted for the German government, and they show that the reform has been generally successful in attaining its objectives. In particular, we find a significant decrease in mothers' employment probability during the 12 months after giving birth, and a significant increase in mothers' employment probability after the Elterngeld transfer expires.

Keywords: Parental leave; natural experiment; female labor market participation (search for similar items in EconPapers)
JEL-codes: H31 J13 J18 (search for similar items in EconPapers)
Date: 2009
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Citations: View citations in EconPapers (11)

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Working Paper: Now Daddy's Changing Diapers and Mommy's Making Her Career: Evaluating a Generous Parental Leave Regulation Using a Natural Experiment (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:rwirep:145

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