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Paid Parental Leave and Child Development: Evidence from the 2007 German Parental Benefit Reform and Administrative Data

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  • Mathias Huebener
  • Daniel Kuehnle
  • C. Katharina Spiess

Abstract

This paper examines the effects of a substantial change in publicly funded paid parental leave in Germany on child development and socio-economic development gaps. For children born before January 1, 2007, parental leave benefits were means-tested and paid for up to 24 months after childbirth. For children born thereafter, parental leave benefits were earnings-related and only paid for up to 14 months. Higher-income households benefited more from the reform than low-income households. We study the reform effects on children's language skills, motor skills, socio-emotional stability, and school readiness using administrative data from mandatory school entrance examinations at age six and a difference-in-differences design. We find no impact of the reform on child development and socio-economic development gaps. The effects are precisely estimated and robust to various model specifications and sample definitions. Our resultssuggest that such substantial changes in parental leave benefits are unlikely to impact children's development. These findings are consistent with recent studies showing that temporary unrestricted transfers and maternal part-time employment have a limited impact on parental investments in their children.

Suggested Citation

  • 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.
  • Handle: RePEc:diw:diwwpp:dp1651
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    3. 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.
    4. Frodermann, Corinna & Wrohlich, Katharina & Zucco, Aline, 2020. "Parental leave reform and long-run earnings of mothers," IAB-Discussion Paper 202009, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    5. Frodermann, Corinna & Wrohlich, Katharina & Zucco, Aline, 2020. "Parental Leave Reform and Long-Run Earnings of Mothers," IZA Discussion Papers 12935, Institute of Labor Economics (IZA).
    6. 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," Labour Economics, Elsevier, vol. 61(C).
    7. 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).
    8. Tudor, Simona, 2020. "Financial incentives, fertility and early life child outcomes," Labour Economics, Elsevier, vol. 64(C).
    9. 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," IZA Discussion Papers 13271, Institute of Labor Economics (IZA).
    10. 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).
    11. 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.
    12. Huebener, Mathias, 2019. "Life expectancy and parental education," Social Science & Medicine, Elsevier, vol. 232(C), pages 351-365.
    13. 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).
    14. 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.

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    Keywords

    Parental leave benefit; child development; skill formation; parental investments; school readiness; motor skills; language skills; socio-emotional stability; socio-economic differences;
    All these keywords.

    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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