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The Effect of a Family Policy Reform on Mother’s Pay: A Natural Experiment Approach

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  • Pål Schøne

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    Abstract

    All parents in Norway with children aged one to three, who do not attend publicly subsidised day care, are entitled to a cash-for-care (CFC) subsidy. Studies have shown that the reform has reduced mother’s labour supply. In this paper we analyse wage effects of the reform. We put forward a framework for evaluating reforms when reforms are uniformly and equally accessible nation-wide. First, running a simple Difference in differences (DD) analysis, results suggest that the CFC reform has reduced the mother’s wages. However, after controlling for “the age of the child” effect, by running a triple difference approach, we no longer find any evidence of negative wage effects. Copyright Springer Science+Business Media, Inc. 2005

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    File URL: http://hdl.handle.net/10.1007/s11150-005-0708-y
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    Bibliographic Info

    Article provided by Springer in its journal Review of Economics of the Household.

    Volume (Year): 3 (2005)
    Issue (Month): 2 (06)
    Pages: 145-170

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    Handle: RePEc:kap:reveho:v:3:y:2005:i:2:p:145-170

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    Web page: http://www.springerlink.com/link.asp?id=109451

    Related research

    Keywords: child care; wages; public policy; difference-in-differences-in-differences;

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    1. Marianne Bertrand & Esther Duflo & Sendhil Mullainathan, 2004. "How Much Should We Trust Differences-in-Differences Estimates?," The Quarterly Journal of Economics, MIT Press, vol. 119(1), pages 249-275, February.
    2. Kevin Milligan, 2002. "Subsidizing the Stork: New Evidence on Tax Incentives and Fertility," NBER Working Papers 8845, National Bureau of Economic Research, Inc.
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