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Back to Work: Parental Benefits and Mothers’ Labor Market Outcomes in the Medium Run

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  • Jochen Kluve
  • Sebastian Schmitz

Abstract

The authors estimate policy impacts of a generous parental benefit in Germany by using a natural experiment and German census data. They estimate policy effects for the short run (first two years after childbirth) as well as for the medium run (that is, three to five years after childbirth). Although the results confirm the evidence from previous studies for the short run, pronounced patterns emerge for the medium run. First, effects on mothers’ employment probability are positive, significant, and large, ranging up to 10%. These gains are driven primarily by increases in part-time employment and working hours but also by full-time employment for high-income mothers. Moreover, mothers return to their previous employers at significantly higher rates, and employers reward this by raising job quality. The overall positive and sizeable impacts of the reform are centered on mothers from the medium and high terciles of the income distribution; low-income mothers do not benefit.

Suggested Citation

  • Jochen Kluve & Sebastian Schmitz, 2018. "Back to Work: Parental Benefits and Mothers’ Labor Market Outcomes in the Medium Run," ILR Review, Cornell University, ILR School, vol. 71(1), pages 143-173, January.
    • Handle: RePEc:sae:ilrrev:v:71:y:2018:i:1:p:143-173
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    References listed on IDEAS

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    Cited by:

    1. Marcus Tamm, 2018. "Fathers’ Parental Leave-Taking, Childcare Involvement and Mothers’ Labor Market Participation," SOEPpapers on Multidisciplinary Panel Data Research 1006, DIW Berlin, The German Socio-Economic Panel (SOEP).
    2. Mari, Gabriele & Cutuli, Giorgio, 2018. "Do parental leaves make the motherhood wage penalty worse? Assessing two decades of German reforms," SocArXiv f2nrc, Center for Open Science.
    3. Frodermann, Corinna & Wrohlich, Katharina & Zucco, Aline, 2020. "Parental Leave Reform and Long-Run Earnings of Mothers," IZA Discussion Papers 12935, Institute of Labor Economics (IZA).
    4. Welteke, Clara & Wrohlich, Katharina, 2019. "Peer effects in parental leave decisions," Labour Economics, Elsevier, vol. 57(C), pages 146-163.
    5. Jessen, Jonas & Schmitz, Sophia & Waights, Sevrin, 2020. "Understanding day care enrolment gaps," Journal of Public Economics, Elsevier, vol. 190(C).
    6. Anna Raute, 2018. "Can financial incentives reduce the baby gap? Evidence from a reform in maternity leave benefits," Working Papers 871, Queen Mary University of London, School of Economics and Finance.
    7. Cygan-Rehm, Kamila & Kuehnle, Daniel & Riphahn, Regina T., 2018. "Paid parental leave and families’ living arrangements," Labour Economics, Elsevier, vol. 53(C), pages 182-197.
    8. Zimmert, Franziska, 2019. "Early child care and maternal employment: empirical evidence from Germany," IAB-Discussion Paper 201902, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    9. Gabriele Mari & Giorgio Cutuli, 2019. "Do Parental Leaves Make the Motherhood Wage Penalty Worse? Assessing Two Decades of German Reforms," SOEPpapers on Multidisciplinary Panel Data Research 1025, DIW Berlin, The German Socio-Economic Panel (SOEP).
    10. Tamm, Marcus, 2019. "Fathers’ parental leave-taking, childcare involvement and labor market participation," Labour Economics, Elsevier, vol. 59(C), pages 184-197.
    11. Raute, Anna, 2019. "Can financial incentives reduce the baby gap? Evidence from a reform in maternity leave benefits," Journal of Public Economics, Elsevier, vol. 169(C), pages 203-222.

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