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Economic incentives and the timing of births: evidence from the German parental benefit reform of 2007

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  • Michael Neugart

    ()

  • Henry Ohlsson

    ()

Abstract

Economic theory suggests that incentives matter for people’s decisions. This paper investigates whether this also holds for less self-evident areas of life such as the timing of births. We use a natural experiment when the German government changed its parental benefit system on January 1, 2007. The policy change strongly increased economic incentives for women to postpone delivery provided that they were employed. Applying a difference-in-difference-in-difference approach, we find very strong evidence that women with an employment history near to the end of their term indeed succeeded to shift births to the New Year and, therefore, could benefit from the new and more generous parental benefit system. Suggesting a model of chain reactions, we also report evidence that some women with due dates earlier in December tried but did not succeed to shift births to the New Year. Copyright Springer-Verlag 2013

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Bibliographic Info

Article provided by Springer in its journal Journal of Population Economics.

Volume (Year): 26 (2013)
Issue (Month): 1 (January)
Pages: 87-108

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Handle: RePEc:spr:jopoec:v:26:y:2013:i:1:p:87-108

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Related research

Keywords: Timing of births; Economic incentives; Parental benefits; Policy reform; J130; J180; H530; D190;

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References

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  1. Eliason, Marcus & Ohlsson, Henry, 2010. "Timing of death and the repeal of the Swedish inheritance tax," Working Paper Series, Center for Fiscal Studies 2010:2, Uppsala University, Department of Economics.
  2. Edward C. Norton & Hua Wang & Chunrong Ai, 2004. "Computing interaction effects and standard errors in logit and probit models," Stata Journal, StataCorp LP, vol. 4(2), pages 154-167, June.
  3. Jochen Kluve & Marcus Tamm, 2013. "Parental leave regulations, mothers’ labor force attachment and fathers’ childcare involvement: evidence from a natural experiment," Journal of Population Economics, Springer, vol. 26(3), pages 983-1005, July.
  4. Marcus Tamm, 2009. "The Impact of a Large Parental Leave Benefit Reform on the Timing of Birth around the Day of Implementation," Ruhr Economic Papers 0098, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
  5. Gans, Joshua S. & Leigh, Andrew, 2009. "Born on the first of July: An (un)natural experiment in birth timing," Journal of Public Economics, Elsevier, vol. 93(1-2), pages 246-263, February.
  6. Eliason, Marcus & Ohlsson, Henry, 2008. "Living to save taxes," Economics Letters, Elsevier, vol. 100(3), pages 340-343, September.
  7. Joshua S. Gans & Andrew Leigh, 2006. "Did the Death of Australian Inheritance Taxes Affect Deaths?," CEPR Discussion Papers 530, Centre for Economic Policy Research, Research School of Economics, Australian National University.
  8. Ai, Chunrong & Norton, Edward C., 2003. "Interaction terms in logit and probit models," Economics Letters, Elsevier, vol. 80(1), pages 123-129, July.
  9. Wojciech Kopczuk & Joel Slemrod, 2003. "Dying to Save Taxes: Evidence from Estate-Tax Returns on the Death Elasticity," The Review of Economics and Statistics, MIT Press, vol. 85(2), pages 256-265, May.
  10. Maria Gutiérrez-Domènech, 2008. "The impact of the labour market on the timing of marriage and births in Spain," Journal of Population Economics, Springer, vol. 21(1), pages 83-110, January.
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Cited by:
  1. Gabriela Aparicio & Paul E. Carrillo & M. Shahe Emran, 2013. "Are Sunday Babies Doomed for Life? Measuring the Sunday-Born Achievement Gap in Ecuador," Working Papers 2013-2, The George Washington University, Institute for International Economic Policy.
  2. Joshua S. Gans & Andrew Leigh, 2012. "Bargaining Over Labour: Do Patients Have Any Power?," The Economic Record, The Economic Society of Australia, vol. 88(281), pages 182-194, 06.
  3. Eliason, Marcus & Ohlsson, Henry, 2010. "Timing of death and the repeal of the Swedish inheritance tax," Working Paper Series 2010:5, Uppsala University, Department of Economics.
  4. Sinclair, Sarah & Boymal, Jonathan & de Silva, Ashton J, 2012. "Is the fertility response to the Australian baby bonus heterogeneous across maternal age? Evidence from Victoria," MPRA Paper 42725, University Library of Munich, Germany.
  5. Sara LaLumia & James M. Sallee & Nicholas Turner, 2013. "New Evidence on Taxes and the Timing of Birth," NBER Working Papers 19283, National Bureau of Economic Research, Inc.
  6. 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.

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