The Effects of Family Policy on Mothers’ Labor Supply: Combining Evidence from a Structural Model and a Natural Experiment

43 Pages Posted: 30 Apr 2014 Last revised: 6 May 2014

See all articles by Johannes Geyer

Johannes Geyer

German Institute for Economic Research (DIW Berlin)

Peter Haan

DIW Berlin, German Institute for Economic Research; IZA Institute of Labor Economics

Katharina Wrohlich

DIW Berlin, German Institute for Economic Research

Date Written: April 1, 2014

Abstract

Parental leave and subsidized child care are prominent examples of family policies supporting the reconciliation of family life and labor market careers for mothers. In this paper, we combine different empirical strategies to evaluate the employment effects of these policies for mothers in Germany. In particular we estimate a structural labor supply model and exploit a natural experiment, i.e. the reform of parental leave benefits. By exploiting and combining the advantages of the different methods, i.e the internal validity of the natural experiment and the external validity of the structural model, we can go beyond evaluation studies restricted to one particular methodology. Our findings suggest that a combination of parental leave benefits and subsidized child care leads to sizable employment effects of mothers.

Keywords: labor supply, parental leave benefits, childcare costs, structural model, natural experiment

JEL Classification: J22, H31, C52

Suggested Citation

Geyer, Johannes and Haan, Peter and Wrohlich, Katharina, The Effects of Family Policy on Mothers’ Labor Supply: Combining Evidence from a Structural Model and a Natural Experiment (April 1, 2014). SOEPpaper No. 645; DIW Berlin Discussion Paper No. 1366. Available at SSRN: https://ssrn.com/abstract=2430133 or http://dx.doi.org/10.2139/ssrn.2430133

Johannes Geyer (Contact Author)

German Institute for Economic Research (DIW Berlin) ( email )

Mohrenstraße 58
Berlin, 10117
Germany

HOME PAGE: http://www.diw.de/programme/jsp/MA.jsp?uid=jgeyer&language=en

Peter Haan

DIW Berlin, German Institute for Economic Research ( email )

Mohrenstraße 58
Berlin, 10117
Germany

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Katharina Wrohlich

DIW Berlin, German Institute for Economic Research ( email )

Mohrenstraße 58
Berlin, 10117
Germany

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