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The Effects of Family Policy on Mothers' Labor Supply: Combining Evidence from a Structural Model and a Natural Experiment

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  • Johannes Geyer
  • Peter Haan
  • Katharina Wrohlich

Abstract

Parental leave and subsidized child care are prominent examples of family policies supporting the reconciliation of family life and labor market careers for mothers. In this paper, we combine different empirical strategies to evaluate the employment effects of these policies for mothers in Germany. In particular we estimate a structural labor supply model and exploit a natural experiment, i.e. the reform of parental leave benefits. By exploiting and combining the advantages of the different methods, i.e the internal validity of the natural experiment and the external validity of the structural model, we can go beyond evaluation studies restricted to one particular methodology. Our findings suggest that a combination of parental leave benefits and subsidized child care leads to sizable employment effects of mothers.

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Paper provided by DIW Berlin, German Institute for Economic Research in its series Discussion Papers of DIW Berlin with number 1366.

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Length: 41 p.
Date of creation: 2014
Date of revision:
Handle: RePEc:diw:diwwpp:dp1366

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Keywords: Labor supply; parental leave benefits; childcare costs; structural model; natural experiment;

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