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The Effects of Family Policy on Mothers' Labor Supply: Combining Evidence from a Structural Model and a Natural Experiment

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  • Johannes Geyer
  • Peter Haan
  • Katharina Wrohlich

Abstract

Parental leave and subsidized child care are prominent examples of family policies supporting the reconciliation of family life and labor market careers for mothers. In this paper, we combine different empirical strategies to evaluate the employment effects of these policies for mothers in Germany. In particular we estimate a structural labor supply model and exploit a natural experiment, i.e. the reform of parental leave benefits. By exploiting and combining the advantages of the different methods, i.e the internal validity of the natural experiment and the external validity of the structural model, we can go beyond evaluation studies restricted to one particular methodology. Our findings suggest that a combination of parental leave benefits and subsidized child care leads to sizable employment effects of mothers.Keywords: labor supply, parental leave benefits, childcare costs, structural model, natural experiment

Suggested Citation

  • Johannes Geyer & Peter Haan & Katharina Wrohlich, 2014. "The Effects of Family Policy on Mothers' Labor Supply: Combining Evidence from a Structural Model and a Natural Experiment," SOEPpapers on Multidisciplinary Panel Data Research 645, DIW Berlin, The German Socio-Economic Panel (SOEP).
  • Handle: RePEc:diw:diwsop:diw_sp645
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    Cited by:

    1. Kai-Uwe Müller & Katharina Wrohlich, 2016. "Two Steps Forward—One Step Back? Evaluating Contradicting Child Care Policies in Germany," CESifo Economic Studies, CESifo, vol. 62(4), pages 672-698.
    2. Andreas Thiemann, 2015. "Pension Wealth and Maternal Employment: Evidence from a Reform of the German Child Care Pension Benefit," Discussion Papers of DIW Berlin 1499, DIW Berlin, German Institute for Economic Research.
    3. Schnabel Claus, 2016. "United, Yet Apart? A Note on Persistent Labour Market Differences between Western and Eastern Germany," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 236(2), pages 157-179, March.
    4. Henk-Wim de Boer & Egbert Jongen & Jan Kabatek, 2014. "The effectiveness of fiscal stimuli for working parents," CPB Discussion Paper 286.rdf, CPB Netherlands Bureau for Economic Policy Analysis.
    5. Müller, Kai-Uwe & Wrohlich, Katharina & Sengül, Denise, 2016. "Does subsidized care for toddlers increase maternal labor supply? Evidence from a large-scale expansion of early childcare," VfS Annual Conference 2016 (Augsburg): Demographic Change 145654, Verein für Socialpolitik / German Economic Association.
    6. Henk-Wim de Boer & Egbert Jongen & Jan Kabatek, 2014. "The effectiveness of fiscal stimuli for working parents," CPB Discussion Paper 286, CPB Netherlands Bureau for Economic Policy Analysis.
    7. Bergemann, Annette & Riphahn, Regina T., 2015. "Maternal Employment Effects of Paid Parental Leave," IZA Discussion Papers 9073, Institute of Labor Economics (IZA).
    8. Tingyun Chen & Jean-Jacques Hallaert & Alexander Pitt & Haonan Qu & Maximilien Queyranne & Alaina Rhee & Anna Shabunina & Jérôme Vandenbussche & Irene Yackovlev, 2018. "Inequality and Poverty across Generations in the European Union," IMF Staff Discussion Notes 18/01, International Monetary Fund.
    9. Sascha Drahs & Ulrich Schneider & Philipp Schrauth, 2015. "Geplante und tatsächliche Erwerbsunterbrechungen von Müttern," DIW Roundup: Politik im Fokus 64, DIW Berlin, German Institute for Economic Research.
    10. Kabátek, Jan, 2015. "Essays on public policy and household decision making," Other publications TiSEM 8cdb178e-ad98-42e5-a7e1-b, Tilburg University, School of Economics and Management.
    11. Taryn W. Morrissey, 2017. "Child care and parent labor force participation: a review of the research literature," Review of Economics of the Household, Springer, vol. 15(1), pages 1-24, March.
    12. Shelley Clark & Caroline W. Kabiru & Sonia Laszlo & Stella Muthuri, 2019. "The Impact of Childcare on Poor Urban Women’s Economic Empowerment in Africa," Demography, Springer;Population Association of America (PAA), vol. 56(4), pages 1247-1272, August.

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    More about this item

    JEL classification:

    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • C52 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Evaluation, Validation, and Selection

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