Abstract
Abstract Parental leave and child care are important instruments of family policies to improve work–family balance. This paper studies the impact of the substantial change in Germany’s parental leave system on maternal employment. The aim of the reform was to decrease birth-related maternal employment breaks by providing more generous parental benefits for a shorter period of time. Using the German Socio-Economic Panel data for 2002–2015, I exploited quasi-experimental variation in the benefits to estimate the impact of the reform. I incorporated the mother’s decision to substitute her care time with the public child care. To control for the availability of child care, I used spatial and temporal variation in the availability of childcare slots. Overall, I did not find significant changes in maternal employment during the first three years of motherhood after the reform implementation. Only for high-income mothers, the reform produced a significant decrease in the employment participation during the first year of leave and an increase in employment probability after the benefits expired. The empirical findings suggest that the restriction in the childcare availability became an important constraint for the employment effect of the reform.
Highlights
The relatively low labor participation rate of mothers with young children is a particular characteristic of female labor market
Without controlling for childcare decision, the findings suggested the positive impact of the reform on the employment after childbirth
The results suggest that the mothers who use formal child care increase their marginal probability to return to work by 40% points comparing to the mothers without access to public child care
Summary
The relatively low labor participation rate of mothers with young children is a particular characteristic of female labor market. These differences are significantly large for mothers with children aged zero to two years. Germany has one of the lowest participation rate for this category (53.8%) among the reported countries. The German females without children report one of the highest participation rates (8.29%). The comparison of these indicators with the values reported in 2006 (Figure 2) reveals the persistence in such participation distribution
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