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Back to work or stay at home? Family policies and maternal employment in Finland

Author

Listed:
  • Eva Österbacka

    (Åbo Akademi Universtiy)

  • Tapio Räsänen

    (Kela Research)

Abstract

The employment effects of family policies depend on the mother’s labor market attachment and on the age of the child. We study the effects of child home care (cash-for-care) and private day care allowances on mothers’ return to employment after childbirth. Our identification strategy exploits changes in municipal-level subsidies. We find that higher private day care allowances have no effect while higher home care allowances increase the length of home care. A 100-euro higher level of home care allowance prolongs home care by 2–3 months, on average. The home care allowance combined with low labor market attachment and low earnings potential pre-birth delay the return to employment. However, the effect of the allowance diminishes over time. Higher subsidies have no impact by the time a child turns two. Reductions in subsidies stimulate a faster return to employment.

Suggested Citation

  • Eva Österbacka & Tapio Räsänen, 2022. "Back to work or stay at home? Family policies and maternal employment in Finland," Journal of Population Economics, Springer;European Society for Population Economics, vol. 35(3), pages 1071-1101, July.
    • Handle: RePEc:spr:jopoec:v:35:y:2022:i:3:d:10.1007_s00148-021-00843-4
    DOI: 10.1007/s00148-021-00843-4
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    More about this item

    Keywords

    Maternal labor supply; Child-care subsidies; Family policy; Gender equality;
    All these keywords.

    JEL classification:

    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • J13 - Labor and Demographic Economics - - Demographic Economics - - - Fertility; Family Planning; Child Care; Children; Youth
    • J18 - Labor and Demographic Economics - - Demographic Economics - - - Public Policy
    • J16 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Gender; Non-labor Discrimination

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