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Parental leave policies and socio-economic gaps in child development: Evidence from a substantial benefit reform using administrative data

Author

Listed:
  • Huebener, Mathias
  • Kuehnle, Daniel
  • Spiess, C. Katharina

Abstract

This paper examines the effects of substantial changes in paid parental leave on child development and socio-economic development gaps. We analyse a German reform that replaced a means-tested with an earnings-related benefit scheme. Higher-income households benefited relatively more from the reform than low-income households. The reform expanded paid leave in the first year, while it removed paid leave in the second year after childbirth. We compare children born around the eligibility cut-off on January 1st 2007 and contrast them with children from the preceding, unaffected cohort within a difference-in-differences approach. The analysis is based on administrative data from mandatory school entrance examinations containing detailed child development assessments at age six. Our precise and robust estimates reveal no effects of the changes in parental leave benefits on child development across various socio-economic groups, and consequently no effects on socio-economic development gaps. However, based on administrative employment data, we document substantial effects on maternal employment and family income. The paper concludes that reform effects on today’s mothers are not sacrificed by increases in SES gaps of the future workforce.

Suggested Citation

  • Huebener, Mathias & Kuehnle, Daniel & Spiess, C. Katharina, 2019. "Parental leave policies and socio-economic gaps in child development: Evidence from a substantial benefit reform using administrative data," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 61.
    • Handle: RePEc:zbw:espost:243172
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    Cited by:

    1. Mari, Gabriele & Cutuli, Giorgio, 2018. "Do parental leaves make the motherhood wage penalty worse? Assessing two decades of German reforms," SocArXiv f2nrc, Center for Open Science.
    2. Bicakova, Alena & Kaliskova, Klara, 2022. "Is Longer Maternal Care Always Beneficial? The Impact of a Four-Year Paid Parental Leave," IZA Discussion Papers 15640, Institute of Labor Economics (IZA).
    3. Mathias Huebener & Jonas Jessen & Daniel Kuehnle & Michael Oberfichtner, 2025. "Parental Leave, Worker Substitutability and Firms’ Employment," The Economic Journal, Royal Economic Society, vol. 135(669), pages 1467-1495.
    4. Houmark, Mikkel Aagaard & Jørgensen, Cecilie Marie Løchte & Kristiansen, Ida Lykke & Gensowski, Miriam, 2024. "Effects of extending paid parental leave on children’s socio-emotional skills and well-being in adolescence," European Economic Review, Elsevier, vol. 170(C).
    5. Cheti Nicoletti & Kjell G. Salvanes & Emma Tominey, 2023. "Mothers Working during Preschool Years and Child Skills: Does Income Compensate?," Journal of Labor Economics, University of Chicago Press, vol. 41(2), pages 389-429.
    6. Glogowsky, Ulrich & Hansen, Emanuel & Sachs, Dominik & Lüthen, Holger, 2025. "The evolution of child-related gender inequality in Germany and the role of family policies, 1960–2018," European Economic Review, Elsevier, vol. 175(C).
    7. Huebener, Mathias & Jessen, Jonas & Kühnle, Daniel & Oberfichtner, Michael, 2021. "A Firm-Side Perspective on Parental Leave," IZA Discussion Papers 14478, Institute of Labor Economics (IZA).
    8. Heisig, Katharina & Zierow, Larissa, 2025. "Paid parental leave and long-term outcomes of children—Quasi-experimental evidence from former East Germany," Labour Economics, Elsevier, vol. 96(C).
    9. Alena Bičáková & Klára Kalíšková, 2024. "Is longer maternal care always beneficial? The impact of a 4-year paid parental leave," Journal of Population Economics, Springer;European Society for Population Economics, vol. 37(2), pages 1-45, June.
    10. repec:osf:socarx:f2nrc_v1 is not listed on IDEAS
    11. Tudor, Simona, 2020. "Financial incentives, fertility and early life child outcomes," Labour Economics, Elsevier, vol. 64(C).
    12. Huebener, Mathias, 2019. "Life expectancy and parental education," Social Science & Medicine, Elsevier, vol. 232(C), pages 351-365.
    13. Collischon, Matthias & Kühnle, Daniel & Oberfichtner, Michael, 2020. "Cash-for-care, or caring for cash? The effects of a home care subsidy on maternal employment, childcare choices, and children s development," IAB-Discussion Paper 202025, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    14. Mette Goertz & Vibeke Myrup Jensen & Sarah Sander, 2023. "Daycare Enrollment Age and Child Development," CEBI working paper series 22-26, University of Copenhagen. Department of Economics. The Center for Economic Behavior and Inequality (CEBI).
    15. Fabel, Marc, 2021. "Maternity leave and children's health outcomes in the long-term," Journal of Health Economics, Elsevier, vol. 76(C).
    16. Nabanita Datta Gupta & Jonas Jessen & C. Katharina Spiess, 2023. "Maternal Life Satisfaction and Child Development from Toddlerhood to Adolescence," SOEPpapers on Multidisciplinary Panel Data Research 1189, DIW Berlin, The German Socio-Economic Panel (SOEP).
    17. Mathias Huebener, 2019. "Life Expectancy and Parental Education in Germany," SOEPpapers on Multidisciplinary Panel Data Research 1023, DIW Berlin, The German Socio-Economic Panel (SOEP).
    18. Matthias Collischon & Daniel Kuehnle & Michael Oberfichtner, 2024. "Who Benefits from Cash†for†Care? Effects of a Home Care Subsidy on Maternal Employment, Childcare Choices, and Children’s Development," Journal of Human Resources, University of Wisconsin Press, vol. 59(4), pages 1011-1051.
    19. Gabriele Mari & Giorgio Cutuli, 2019. "Do Parental Leaves Make the Motherhood Wage Penalty Worse? Assessing Two Decades of German Reforms," SOEPpapers on Multidisciplinary Panel Data Research 1025, DIW Berlin, The German Socio-Economic Panel (SOEP).
    20. Katharina Heisig & Larissa Zierow, 2020. "Elternzeitverlängerung in der DDR: Langfristig höhere Lebenszufriedenheit der Kinder," ifo Dresden berichtet, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 27(02), pages 07-09, April.

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    Keywords

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    JEL classification:

    • J13 - Labor and Demographic Economics - - Demographic Economics - - - Fertility; Family Planning; Child Care; Children; Youth
    • J18 - Labor and Demographic Economics - - Demographic Economics - - - Public Policy
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity

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