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Incentives to work? The impact of a 'Cash-for-Care' benefit for immigrant and native mothers labour market participation

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  • Hardoy, Inés
  • Schøne, Pål
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    Abstract

    To what extent is labour market participation of mothers sensitive to economic incentives? We answer this question by studying the effect on labour market participation of a Norwegian family policy programme that clearly has affected the incentives to participate in the labour market of mothers with small children. From January 1999, all parents with one- and two-year-old children who did not use publicly subsidised day-care became entitled to a benefit, 'Cash-for-Care' ('CFC'). The CFC reform has increased the price of publicly subsidised day-care relative to the price of own care. Economic theory of labour market participation postulates that the CFC reform would have a negative effect on labour market participation for the person most involved in childcare. The results show that the CFC reform has affected mothers' labour market participation negatively. The effects are much stronger for non-western immigrant mothers' than for native mothers. The results support the hypothesis that non-western immigrant mothers do react to changes in the relative prices of childcare and suggests that non-western female immigrants are quite responsive to changes in economic incentives.

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    Bibliographic Info

    Article provided by Elsevier in its journal Labour Economics.

    Volume (Year): 17 (2010)
    Issue (Month): 6 (December)
    Pages: 963-974

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    Handle: RePEc:eee:labeco:v:17:y:2010:i:6:p:963-974

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    Web page: http://www.elsevier.com/locate/labeco

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    Keywords: Labour market Childcare Non-western immigrants Difference-in-differences-in-differences;

    References

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    1. Blundell, Richard & Macurdy, Thomas, 1999. "Labor supply: A review of alternative approaches," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 27, pages 1559-1695 Elsevier.
    2. Daniel S. Hamermesh, 2000. "The Craft of labormetrics," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 53(3), pages 363-380, April.
    3. Pierre Lefebvre & Philip Merrigan, 2008. "Child-Care Policy and the Labor Supply of Mothers with Young Children: A Natural Experiment from Canada," Journal of Labor Economics, University of Chicago Press, vol. 26(3), pages 519-548, 07.
    4. Knudsen, Eric I. & Heckman, James J. & Cameron, Judy L. & Shonkoff, Jack P., 2006. "Economic, Neurobiological and Behavioral Perspectives on Building America's Future Workforce," IZA Discussion Papers 2190, Institute for the Study of Labor (IZA).
    5. David Blau & Erdal Tekin, 2001. "The Determinants and Consequences of Child Care Subsidy Receipt by Low-Income Families," JCPR Working Papers 213, Northwestern University/University of Chicago Joint Center for Poverty Research.
    6. Jane Waldfogel, 1999. "The impact of the family and medical leave act," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 18(2), pages 281-302.
    7. Ai, Chunrong & Norton, Edward C., 2003. "Interaction terms in logit and probit models," Economics Letters, Elsevier, vol. 80(1), pages 123-129, July.
    8. Rachel Connelly & Jean Kimmel, 2003. "Marital status and full-time/part-time work status in child care choices," Applied Economics, Taylor & Francis Journals, vol. 35(7), pages 761-777.
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    Cited by:
    1. Kluve, Jochen & Schmitz, Sebastian, 2014. "Social Norms and Mothers' Labor Market Attachment: The Medium-Run Effects of Parental Benefits," IZA Discussion Papers 8115, Institute for the Study of Labor (IZA).
    2. Jochen Kluve & Sebastian Schmitz, 2014. "Social Norms and Mothers’ Labor Market Attachment – The Medium-run Effects of Parental Benefits," Ruhr Economic Papers 0481, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.

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