Abstract
In 2007, Germany implemented a generous parental leave regulation in order to make parenthood more attractive and more compatible with a working career, especially for mothers. We evaluate the reform using a natural experiment that compares outcomes of parents with children born shortly after and before the coming into effect of the law, and find a significant decrease in mothers’ employment probability during the 12 months after giving birth, and an increase in mothers’ employment probability after the transfer expires. The implementation of two daddy months is currently not reflected in significant changes in fathers’ time devoted to childcare.
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Notes
For Austria, Lalive and Zweimüller (2009) show that a reduction in paid leave duration made mothers enter earlier.
For example Norway started with one daddy month in 1993 (Solli 2009) and only later on began to steadily increase the amount of time reserved for fathers up to 12 weeks in 2011. Similarly, in 1995 Sweden reserved one month of total parental leave for fathers and increased the number of daddy months to two from 2002 onwards (Ekberg et al. 2005).
See annual reports of the Federal Ministry of Finance (www.bundesfinanzministerium.de). Clearly, in 2007, there was an overlap in spending on the two regulations: the newly introduced Elterngeld absorbed 1.8 Bn. Euros, the phase-out of the Erziehungsgeld ingested 2.0 Bn. Euros. In 2008, the final remaining Erziehungsgeld recipients induced federal spending of 0.6 Bn. Euros.
To keep the discussion tractable we prescind from including the minor effects that the two “daddy months” might have in determining the exact date when the mother (re-) enters the labor force.
In principle, there is a small probability that some of the parents in our treatment group self-selected into treatment, because once they learned about the possible coming into effect of the Elterngeld transfer in May 2006 they immediately decided to become parents (and otherwise would not have done so), and their child was then born before the end of March 2007. Given the fact, however, that the timing of conception cannot be completely controlled by parents, along with the fact that at the point in time at which parents would have had to act accordingly there was no definite knowledge on whether the reform would indeed be implemented, we think that this is a rather hypothetical scenario.
We also checked whether pre-birth labor market attachment was affected by the reform. Neither the probability of ever having worked during the last 12 months before delivery, nor the number of months having worked, nor the probability of having worked directly before delivery (i.e., until maternity protection starts) differs between treatment and control group.
To estimate employment behavior of women within the first year postpartum it seems appropriate to choose a point in time in the second half of that year. During the first 6 months most mothers are likely to stay with their newborn baby regardless of leave regulations. Focusing thus on the second 6 months to characterize mothers’ employment behavior during transfer receipt, the choice of “month 10” is arbitrary. The impact estimates for surrounding months are essentially the same.
If stated expectations differ systematically from actual behavior later on, some of the difference between treatment and control group might also be due to the fact that 1.5 years after childbirth was slightly closer to the time of interview for the control group than for the treatment group.
In addition to the supply of childcare East and West Germany are different with respect to several other factors. For example the overall unemployment rate is higher in the East, average wages are lower, GDP growth was somewhat smaller in 2007 etc. Also, the overall attitude towards maternal employment shortly after childbirth might still differ due to historical reasons (Bredtmann et al. 2009). Under the communist regime in the East it was very common that women reentered the labor market after 12 months or earlier. While we cannot disentangle which of these differences is driving the resulting heterogeneity in behavioral changes, we think that the comprehensive supply of childcare (and perhaps the difference in attitudes) is most likely to be responsible.
Power calculations show that with a sample size of around 400 observations in both treatment and control group and a binary indicator that equals 1 in 35% of cases in the control group, the raw difference between treatment and control group has to be more than 5.5 percentage points in order to become significant at the 10%-level, and almost 7 percentage points for significance at the 5%-level (when not controlling for other characteristics).
Less than 4% of fathers received the old Erziehungsgeld transfer.
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Acknowledgements
We gratefully acknowledge helpful suggestions by two anonymous referees and the editor, as well as by participants of ESPE 2009 Seville, EALE 2009 Tallinn, and a seminar at RWI. The usual disclaimer applies.
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Kluve, J., Tamm, M. Parental leave regulations, mothers’ labor force attachment and fathers’ childcare involvement: evidence from a natural experiment. J Popul Econ 26, 983–1005 (2013). https://doi.org/10.1007/s00148-012-0404-1
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DOI: https://doi.org/10.1007/s00148-012-0404-1