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The Parental Leave Benefit Reform in Germany: Costs and Labour Market Outcomes of Moving towards the Nordic Model

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  • C. Spiess

    ()

  • Katharina Wrohlich

    ()

Abstract

Germany is known to have one of the lowest fertility rates among Western European countries and also relatively low employment rates of mothers with young children. Although these trends have been observed during the last decades, the German public has only recently begun discussing these issues. In order to reverse these trends, the German government recently passed a reform of the parental leave benefit system in line with the model practiced in Nordic countries. The core piece of the reform is the replacement of the existing means-tested parental leave benefit by a wage-dependent benefit for the period of one year. In this paper we simulate fiscal costs and expected labour market outcomes of this reform. Based on a micro-simulation model for Germany we calculate first-round effects, which assume no behavioural changes and second-round effects, where we take labour supply changes into account. Our results show that on average all income groups, couples and single households, benefit from the reform. The calculation of overall costs of the reform shows that the additional costs are moderate. As far as the labour market behaviour of parents is concerned, we find no significant changes of labour market outcomes in the first year after birth. However, in the second year, mothers increase their working hours and labour market participation significantly. Our results suggest that the reform will achieve one of its aims, namely the increase in the labour market participation of mothers with young children. --

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Bibliographic Info

Article provided by Springer in its journal Population Research and Policy Review.

Volume (Year): 27 (2008)
Issue (Month): 5 (October)
Pages: 575-591

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Handle: RePEc:kap:poprpr:v:27:y:2008:i:5:p:575-591

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Web page: http://www.springerlink.com/link.asp?id=102983

Related research

Keywords: Female labour supply; Parental leave; Micro simulation study;

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References

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Citations

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Cited by:
  1. Denis Beninger & Holger Bonin & Julia Horstschräer & Grit Mühler, 2010. "Wirkungen eines Betreuungsgeldes bei bedarfsgerechtem Ausbau frühkindlicher Kindertagesbetreuung: eine Mikrosimulationsstudie," Vierteljahrshefte zur Wirtschaftsforschung / Quarterly Journal of Economic Research, DIW Berlin, German Institute for Economic Research, vol. 79(3), pages 147-168.
  2. Annette Bergemann & Regina Riphahn, 2011. "Female labour supply and parental leave benefits - the causal effect of paying higher transfers for a shorter period of time," Applied Economics Letters, Taylor & Francis Journals, vol. 18(1), pages 17-20.
  3. Marcus Tamm, 2013. "The Impact of a Large Parental Leave Benefit Reform on the Timing of Birth around the Day of Implementation-super-," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 75(4), pages 585-601, 08.
  4. Geyer, Johannes & Haan, Peter & Spieß, C. Katharina & Wrohlich, Katharina, 2013. "Das Elterngeld und seine Wirkungen auf das Haushaltseinkommen junger Familien und die Erwerbstätigkeit von Müttern," EconStor Open Access Articles, ZBW - German National Library of Economics, pages 193-211.
  5. C. Katharina Spieß, 2011. "Vereinbarkeit von Familie und Beruf – wie wirksam sind deutsche „Care Policies“?," Perspektiven der Wirtschaftspolitik, Verein für Socialpolitik, vol. 12(s1), pages 4-27, 05.
  6. Anna Kurowska & Michal Myck & Katharina Wrohlich, 2012. "Family and Labor Market Choices: Requirements to Guide Effective Evidence-Based Policy," Discussion Papers of DIW Berlin 1234, DIW Berlin, German Institute for Economic Research.
  7. Barbara Hanel, 2012. "The Impact of Paid Maternity Leave on Labour Market Outcomes," Melbourne Institute Working Paper Series wp2012n19, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.
  8. Marco Caliendo & Jens Hogenacker, 2012. "The German labor market after the Great Recession: successful reforms and future challenges," IZA Journal of European Labor Studies, Springer, vol. 1(1), pages 1-24, December.
  9. Johannes Geyer & Peter Haan & Katharina Wrohlich, 2014. "The Effects of Family Policy on Mothers' Labor Supply: Combining Evidence from a Structural Model and a Natural Experiment," SOEPpapers on Multidisciplinary Panel Data Research 645, DIW Berlin, The German Socio-Economic Panel (SOEP).
  10. Cygan-Rehm, Kamila, 2013. "Earnings-Dependent Parental Leave Benefit and Fertility: Evidence from Germany," Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order 80021, Verein für Socialpolitik / German Economic Association.
  11. Kamila Cygan-Rehm, 2013. "Auswirkungen des Elterngeldes auf Folgegeburten in West- und Ostdeutschland," ifo Dresden berichtet, Ifo Institute for Economic Research at the University of Munich, vol. 20(06), pages 39-43, December.
  12. Christian Dudel, 2009. "The Demographic Dilemma: Fertility, Female Labor Force Participation and Future Growth in Germany 2007-2060," SOEPpapers on Multidisciplinary Panel Data Research 158, DIW Berlin, The German Socio-Economic Panel (SOEP).
  13. Anne Salles & Clémentine Rossier & Sara Brachet, 2010. "Understanding the long term effects of family policies on fertility: The diffusion of different family models in France and Germany," Demographic Research, Max Planck Institute for Demographic Research, Rostock, Germany, vol. 22(34), pages 1057-1096, June.
  14. Fagnani, Jeanne, 2012. "Recent reforms in childcare and family policies in France and Germany: What was at stake?," Children and Youth Services Review, Elsevier, vol. 34(3), pages 509-516.
  15. Pia S. Schober, 2011. "Maternal Labor Market Return, Parental Leave Policies, and Gender Inequality in Housework," SOEPpapers on Multidisciplinary Panel Data Research 422, DIW Berlin, The German Socio-Economic Panel (SOEP).

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