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Incentives to work? The impact of a 'Cash-for-Care' benefit for immigrant and native mothers labour market participation

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  • Hardoy, Inés
  • Schøne, Pål

Abstract

To what extent is labour market participation of mothers sensitive to economic incentives? We answer this question by studying the effect on labour market participation of a Norwegian family policy programme that clearly has affected the incentives to participate in the labour market of mothers with small children. From January 1999, all parents with one- and two-year-old children who did not use publicly subsidised day-care became entitled to a benefit, 'Cash-for-Care' ('CFC'). The CFC reform has increased the price of publicly subsidised day-care relative to the price of own care. Economic theory of labour market participation postulates that the CFC reform would have a negative effect on labour market participation for the person most involved in childcare. The results show that the CFC reform has affected mothers' labour market participation negatively. The effects are much stronger for non-western immigrant mothers' than for native mothers. The results support the hypothesis that non-western immigrant mothers do react to changes in the relative prices of childcare and suggests that non-western female immigrants are quite responsive to changes in economic incentives.

Suggested Citation

  • Hardoy, Inés & Schøne, Pål, 2010. "Incentives to work? The impact of a 'Cash-for-Care' benefit for immigrant and native mothers labour market participation," Labour Economics, Elsevier, vol. 17(6), pages 963-974, December.
  • Handle: RePEc:eee:labeco:v:17:y:2010:i:6:p:963-974
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    References listed on IDEAS

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    7. Pierre Lefebvre & Philip Merrigan, 2008. "Child-Care Policy and the Labor Supply of Mothers with Young Children: A Natural Experiment from Canada," Journal of Labor Economics, University of Chicago Press, vol. 26(3), pages 519-548, July.
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    Cited by:

    1. repec:zbw:rwirep:0481 is not listed on IDEAS
    2. repec:dem:demres:v:38:y:2018:i:33 is not listed on IDEAS
    3. Jochen Kluve & Sebastian Schmitz, 2014. "Social Norms and Mothers’ Labor Market Attachment – The Medium-run Effects of Parental Benefits," Ruhr Economic Papers 0481, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
    4. Schmitz, Sebastian & Kluve, Jochen, 2014. "Parental Benefits and Mothers Labor Market Outcomes in the Medium Run," Annual Conference 2014 (Hamburg): Evidence-based Economic Policy 100567, Verein für Socialpolitik / German Economic Association.
    5. Sebastian Schmitz & Jochen Kluve, 2014. "Social Norms and Mothers' Labor Market Attachment: The Medium-run Effects of Parental Benefits," Working Papers 2014001, Berlin Doctoral Program in Economics and Management Science (BDPEMS).
    6. Michael J. Kottelenberg & Steven F. Lehrer, 2017. "Does Quebec's Subsidized Child Care Policy Give Boys and Girls an Equal Start?," NBER Working Papers 23259, National Bureau of Economic Research, Inc.
    7. Kluve, Jochen & Schmitz, Sebastian, 2014. "Social Norms and Mothers' Labor Market Attachment – The Medium-run Effects of Parental Benefits," Ruhr Economic Papers 481, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    8. Kluve, Jochen & Schmitz, Sebastian, 2014. "Social Norms and Mothers' Labor Market Attachment: The Medium-Run Effects of Parental Benefits," IZA Discussion Papers 8115, Institute for the Study of Labor (IZA).
    9. Andersland, Leroy & Nilsen, Øivind A., 2016. "Households’ responses to price changes of formal childcare," Discussion Paper Series in Economics 20/2016, Norwegian School of Economics, Department of Economics.

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