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The Effect of a Family Policy Reform on Mother’s Pay: A Natural Experiment Approach

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  • Pål Schøne

Abstract

All parents in Norway with children aged one to three, who do not attend publicly subsidised day care, are entitled to a cash-for-care (CFC) subsidy. Studies have shown that the reform has reduced mother’s labour supply. In this paper we analyse wage effects of the reform. We put forward a framework for evaluating reforms when reforms are uniformly and equally accessible nation-wide. First, running a simple Difference in differences (DD) analysis, results suggest that the CFC reform has reduced the mother’s wages. However, after controlling for “the age of the child” effect, by running a triple difference approach, we no longer find any evidence of negative wage effects. Copyright Springer Science+Business Media, Inc. 2005

Suggested Citation

  • Pål Schøne, 2005. "The Effect of a Family Policy Reform on Mother’s Pay: A Natural Experiment Approach," Review of Economics of the Household, Springer, vol. 3(2), pages 145-170, June.
    • Handle: RePEc:kap:reveho:v:3:y:2005:i:2:p:145-170
    DOI: 10.1007/s11150-005-0708-y
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    References listed on IDEAS

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    1. Kevin Milligan, 2005. "Subsidizing the Stork: New Evidence on Tax Incentives and Fertility," The Review of Economics and Statistics, MIT Press, vol. 87(3), pages 539-555, August.
    2. Marianne Bertrand & Esther Duflo & Sendhil Mullainathan, 2004. "How Much Should We Trust Differences-In-Differences Estimates?," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 119(1), pages 249-275.
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