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Can Financial Incentives Reduce the Baby Gap? Evidence from a Reform in Maternity Leave Benefits

In: Social Insurance Programs (Trans-Atlantic Public Economic Seminar - TAPES)

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  • Anna Raute

Abstract

To assess whether earnings-dependent maternity leave positively impacts fertility and narrows the baby gap between high educated (high earning) and low educated (low earning) women, I exploit a major maternity leave benefit reform in Germany that considerably increases the financial incentives for higher educated and higher earning women to have a child. In particular, I use the large differential changes in maternity leave benefits across education and income groups to estimate the effects on fertility up to 5 years post reform. In addition to demonstrating an up to 22% increase in the fertility of tertiary educated versus low educated women, I find a positive, statistically significant effect of increased benefits on fertility, driven mainly by women at the middle and upper end of the education and income distributions. Overall, the results suggest that earnings-dependent maternity leave benefits, which compensate women commensurate with their opportunity cost of childbearing, could successfully reduce the fertility rate disparity related to mothers' education and earnings.
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Suggested Citation

  • Anna Raute, 2016. "Can Financial Incentives Reduce the Baby Gap? Evidence from a Reform in Maternity Leave Benefits," NBER Chapters,in: Social Insurance Programs (Trans-Atlantic Public Economic Seminar - TAPES) National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberch:13808
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    References listed on IDEAS

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    Cited by:

    1. Malte Sandner, 2015. "Effects of Early Childhood Intervention on Fertility and Maternal Employment: Evidence from a Randomized Controlled Trial," SOEPpapers on Multidisciplinary Panel Data Research 799, DIW Berlin, The German Socio-Economic Panel (SOEP).
    2. Lídia Farré & Libertad González, 2017. "The Effects of Paternity Leave on Fertility and Labor Market Outcomes," Working Papers 978, Barcelona Graduate School of Economics.
    3. Liepmann, Hannah, 2018. "The Impact of a Negative Labor Demand Shock On Fertility - Evidence From the Fall of the Berlin Wall," Rationality and Competition Discussion Paper Series 69, CRC TRR 190 Rationality and Competition.
    4. Huebener, Mathias & Kühnle, Daniel & Spieß, C. Katharina, 2018. "Parental Leave Policies and Socio-Economic Gaps in Child Development: Evidence from a Substantial Benefit Reform Using Administrative Data," IZA Discussion Papers 11794, Institute for the Study of Labor (IZA).
    5. Mathias Huebener & Daniel Kuehnle & C. Katharina Spiess, 2017. "Paid Parental Leave and Child Development: Evidence from the 2007 German Parental Benefit Reform and Administrative Data," Discussion Papers of DIW Berlin 1651, DIW Berlin, German Institute for Economic Research.

    More about this item

    JEL classification:

    • J13 - Labor and Demographic Economics - - Demographic Economics - - - Fertility; Family Planning; Child Care; Children; Youth
    • J16 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Gender; Non-labor Discrimination
    • J18 - Labor and Demographic Economics - - Demographic Economics - - - Public Policy

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