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Efficient Intra-Household Allocation of Parental Leave

  • Parys, Juliane


    (University of Bonn)

  • Schwerhoff, Gregor


    (University of Bonn)

We propose a model of how parents resolve conflicts about sharing the negative short and long-term consequences from parenthood-related career interruptions on earnings. We introduce childcare sharing in a collective model of household behavior with public consumption as in Blundell, Chiappori, and Meghier (2005). Conceptually, the solution to the household problem can be thought of as a two-stage process: Parents first agree on public expenditures on professional childcare; then, conditional on the level of public consumption and the budget constraint stemming from stage one, parents determine their individual job absence durations and private consumption shares. Using relative income measures from German parental benefit data as distribution factors, we find evidence for Pareto efficiency in childcare sharing. More precisely, households with higher total incomes purchase more professional childcare, and changes in distribution factors shift the conditional parental leave allocation in favor of the partner whose relative income increased.

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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 5113.

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Length: 46 pages
Date of creation: Aug 2010
Date of revision:
Handle: RePEc:iza:izadps:dp5113
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  1. Anna Amilon, 2007. "On the sharing of temporary parental leave: the case of Sweden," Review of Economics of the Household, Springer, vol. 5(4), pages 385-404, December.
  2. Ekberg, John & Eriksson, Rickard & Friebel, Guido, 2005. "Parental Leave – A Policy Evaluation of the Swedish "Daddy-Month" Reform," IZA Discussion Papers 1617, Institute for the Study of Labor (IZA).
  3. Andrés Erosa & Luisa Fuster & Diego Restuccia, 2002. "Fertility Decisions and Gender Differences in Labor Turnover, Employment, and Wages," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 5(4), pages 856-891, October.
  4. Chiappori, Pierre-André & Fortin, Bernard & Lacroix, Guy, 2001. "Marriage Market, Divorce Legislation and Household Labor Supply," Cahiers de recherche 0103, Université Laval - Département d'économique.
  5. Gustavo J. Bobonis, 2009. "Is the Allocation of Resources within the Household Efficient? New Evidence from a Randomized Experiment," Journal of Political Economy, University of Chicago Press, vol. 117(3), pages 453-503, 06.
  6. Apps, Patricia F. & Rees, Ray, 1988. "Taxation and the household," Journal of Public Economics, Elsevier, vol. 35(3), pages 355-369, April.
  7. Pierre-André Chiappori & Richard Blundell & Costas Meghir, 2002. "Collective labour supply with children," IFS Working Papers W02/08, Institute for Fiscal Studies.
  8. Mincer, Jacob & Polachek, Solomon, 1974. "Family Investment in Human Capital: Earnings of Women," Journal of Political Economy, University of Chicago Press, vol. 82(2), pages S76-S108, Part II, .
  9. Leslie E. Papke & Jeffrey M. Wooldridge, 1993. "Econometric Methods for Fractional Response Variables with an Application to 401(k) Plan Participation Rates," NBER Technical Working Papers 0147, National Bureau of Economic Research, Inc.
  10. Fran�ois Bourguignon & Martin Browning & Pierre-André Chiappori, 2009. "Efficient Intra-Household Allocations and Distribution Factors: Implications and Identification," Review of Economic Studies, Oxford University Press, vol. 76(2), pages 503-528.
  11. Sarah Jarvis & Stephen P. Jenkins, 1997. "Marital Splits and Income Changes: Evidence for Britain," Papers iopeps97/26, Innocenti Occasional Papers, Economic Policy Series.
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