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Efficient Intra-Household Allocation of Parental Leave

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  • Parys, Juliane

    ()
    (University of Bonn)

  • Schwerhoff, Gregor

    ()
    (University of Bonn)

Abstract

We propose a model of how parents resolve conflicts about sharing the negative short and long-term consequences from parenthood-related career interruptions on earnings. We introduce childcare sharing in a collective model of household behavior with public consumption as in Blundell, Chiappori, and Meghier (2005). Conceptually, the solution to the household problem can be thought of as a two-stage process: Parents first agree on public expenditures on professional childcare; then, conditional on the level of public consumption and the budget constraint stemming from stage one, parents determine their individual job absence durations and private consumption shares. Using relative income measures from German parental benefit data as distribution factors, we find evidence for Pareto efficiency in childcare sharing. More precisely, households with higher total incomes purchase more professional childcare, and changes in distribution factors shift the conditional parental leave allocation in favor of the partner whose relative income increased.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 5113.

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Length: 46 pages
Date of creation: Aug 2010
Date of revision:
Handle: RePEc:iza:izadps:dp5113

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Keywords: childcare; collective model; conditional sharing rule; intra-household allocation;

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References

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  1. Pierre-André Chiappori & Richard Blundell & Costas Meghir, 2002. "Collective labour supply with children," IFS Working Papers, Institute for Fiscal Studies W02/08, Institute for Fiscal Studies.
  2. Gustavo J. Bobonis, 2009. "Is the Allocation of Resources within the Household Efficient? New Evidence from a Randomized Experiment," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 117(3), pages 453-503, 06.
  3. Apps, Patricia F. & Rees, Ray, 1988. "Taxation and the household," Journal of Public Economics, Elsevier, Elsevier, vol. 35(3), pages 355-369, April.
  4. Ekberg, John & Eriksson, Rickard & Friebel, Guido, 2005. "Parental Leave – A Policy Evaluation of the Swedish "Daddy-Month" Reform," IZA Discussion Papers 1617, Institute for the Study of Labor (IZA).
  5. Jacob Mincer & Solomon Polachek, 1974. "Family Investments in Human Capital: Earnings of Women," NBER Chapters, National Bureau of Economic Research, Inc, in: Marriage, Family, Human Capital, and Fertility, pages 76-110 National Bureau of Economic Research, Inc.
  6. Fran�ois Bourguignon & Martin Browning & Pierre-André Chiappori, 2009. "Efficient Intra-Household Allocations and Distribution Factors: Implications and Identification," Review of Economic Studies, Oxford University Press, vol. 76(2), pages 503-528.
  7. Papke, Leslie E & Wooldridge, Jeffrey M, 1996. "Econometric Methods for Fractional Response Variables with an Application to 401(K) Plan Participation Rates," Journal of Applied Econometrics, John Wiley & Sons, Ltd., John Wiley & Sons, Ltd., vol. 11(6), pages 619-32, Nov.-Dec..
  8. Pierre-Andre Chiappori & Bernard Fortin & Guy Lacroix, 2002. "Marriage Market, Divorce Legislation, and Household Labor Supply," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 110(1), pages 37-72, February.
  9. Andrés Erosa & Luisa Fuster & Diego Restuccia, 2002. "Fertility Decisions and Gender Differences in Labor Turnover, Employment, and Wages," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 5(4), pages 856-891, October.
  10. repec:bla:restud:v:76:y:2009:i:2:p:503-528 is not listed on IDEAS
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Cited by:
  1. Olsson, Martin, 2013. "Employment protection and parental child care," Working Paper Series, IFAU - Institute for Evaluation of Labour Market and Education Policy 2013:2, IFAU - Institute for Evaluation of Labour Market and Education Policy.
  2. Boye, Katarina, 2014. "Can you stay at home today? The relationship between economic dependence, parents’ occupation and care leave for sick children," Working Paper Series, IFAU - Institute for Evaluation of Labour Market and Education Policy 2014:4, IFAU - Institute for Evaluation of Labour Market and Education Policy.

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