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Economic incentives and the timing of births: Evidence from the German parental benefit reform 2007

  • Henry Ohlsson, Michael Neugart and

    ()

    (Uppsala Center for Fiscal Studies)

Economic theory suggests that incentives matter for people's decisions. This paper investigates whether this also holds for less self-evident areas of life such as the timing of births. We make use of a nautral experiment when the German government changed its parental benefit system January 1, 2007. The policy changes strongly increased economic incentives for women to postpone delivery to the new year provided that they were employed. The incentives for women not employed were not the same, they could gain slightly from giving birth before the policy change. Applying a difference-in-difference-in-difference approach, we find very strong evidence that women with an employment history near to the end of their term indeed succeeded to shift births and became subject to the new and more generous parental benefit system. We estimate the quantitative impact to correspond to a 5-6 percentage points increased probability to give birth the first seven days of 2007 rather than the last seven days of 2006 for employed women.

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File URL: http://ucfs.nek.uu.se/digitalAssets/129/129500_wp200910.pdf
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Paper provided by Uppsala University, Department of Economics in its series Working Paper Series, Center for Fiscal Studies with number 2009:10.

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Length: 20 pages
Date of creation: 12 Oct 2009
Date of revision:
Publication status: Published as Henry Ohlsson, Michael Neugart and, 'Economic incentives and the timing of births: Evidence from the German parental benefit reform 2007' in Journal of Population Economics, 2013, pages 87-108.
Handle: RePEc:hhs:uufswp:2009_010
Contact details of provider: Postal: Department of Economics, Uppsala University, P. O. Box 513, SE-751 20 Uppsala, Sweden
Phone: + 46 18 471 25 00
Fax: + 46 18 471 14 78
Web page: http://www.nek.uu.se/
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  1. repec:rwi:repape:0098 is not listed on IDEAS
  2. Gans Joshua S & Leigh Andrew, 2006. "Did the Death of Australian Inheritance Taxes Affect Deaths?," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 6(1), pages 1-9, November.
  3. Wojciech Kopczuk & Joel Slemrod, 2003. "Dying to Save Taxes: Evidence from Estate-Tax Returns on the Death Elasticity," The Review of Economics and Statistics, MIT Press, vol. 85(2), pages 256-265, May.
  4. Jochen Kluve & Marcus Tamm, 2013. "Parental leave regulations, mothers’ labor force attachment and fathers’ childcare involvement: evidence from a natural experiment," Journal of Population Economics, Springer, vol. 26(3), pages 983-1005, July.
  5. Ai, Chunrong & Norton, Edward C., 2003. "Interaction terms in logit and probit models," Economics Letters, Elsevier, vol. 80(1), pages 123-129, July.
  6. Eliason, Marcus & Ohlsson, Henry, 2010. "Timing of death and the repeal of the Swedish inheritance tax," Working Paper Series, Center for Fiscal Studies 2010:2, Uppsala University, Department of Economics.
  7. Joshua S. Gans & Andrew Leigh, 2006. "Born on the First of July: An (Un)natural Experiment in Birth Timing," CEPR Discussion Papers 529, Centre for Economic Policy Research, Research School of Economics, Australian National University.
  8. Eliason, Marcus & Ohlsson, Henry, 2007. "Living to Save Taxes," Working Paper Series 2007:8, Uppsala University, Department of Economics.
  9. Edward C. Norton & Hua Wang & Chunrong Ai, 2004. "Computing interaction effects and standard errors in logit and probit models," Stata Journal, StataCorp LP, vol. 4(2), pages 154-167, June.
  10. Maria Gutiérrez-Domènech, 2008. "The impact of the labour market on the timing of marriage and births in Spain," Journal of Population Economics, Springer, vol. 21(1), pages 83-110, January.
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