Paid Parental Leave and Child Development: Evidence from the 2007 German Parental Benefit Reform and Administrative Data

Abstract

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in March 2017Abstract This paper examines the effects of a substantial change in publicly funded paid parental leave in Germany on child development and socio-economic development gaps. For children born before January 1, 2007, parental leave benefits were means-tested and paid for up to 24 months after childbirth. For children born thereafter, parental leave benefits were earnings-related and only paid for up to 14 months. Higher-income households benefited more from the reform than low-income households. We study the reform effects on children's language skills, motor skills, socio-emotional stability, and school readiness using administrative data from mandatory school entrance examinations at age six and a difference-in-differences design. We find no impact of the reform on child development and socio-economic development gaps. The effects are precisely estimated and robust to various model specifications and sample definitions. Our results suggest that such substantial changes in parental leave benefits are unlikely to impact children's development. These findings are consistent with recent studies showing that temporary unrestricted transfers and maternal part-time employment have a limited impact on parental investments in their children.

Parental leave policies and socio-economic gaps in child development: Evidence from a substantial benefit reform using administrative data

“…The zero-reform effects can be rationalised with findings from recent economic studies. The substantial changes in household income due to the changes in paid parental leave can be interpreted 26 We also stratified the sample by highest level of household education and draw the same conclusion (see Huebener et al, 2017). We draw the same conclusions from a more restrictive model in which we only interact the treatment dummy with the heterogeneity dimension (available on request).…”

“…For previous detailed descriptions of the literature on parental leave policies and child development, see, e.g. Danzer and Lavy (2016), Huebener (2016) and Huebener et al (2017). Carneiro et al, 2015), finding some positive effects on infant health, schooling and labour market outcomes.…”

The effects of incentivizing early prenatal care on infant health

“…For this reason, we view our donut-hole difference-in-differences as less problematic from interpretation standpoint given that it contrasts individuals who were not affected by the reform at all with those who were affected by both of its elements. 19 A similar strategy has been used, e.g., by Lalive and Zweimüller (2009), Dustmann and Schönberg (2012), Cygan-Rehm (2016), and Huebener et al (2019), to evaluate the impacts of parental leave reforms. Given that we use daily-level data, our model specification is particularly close to Borra et al (2019), who examined the health consequences of speeding up births for non-medical reasons.…”

The Nordic Model of Father Quotas in Leave Policies: A Case of Policy Transfer?

“…Public opinion was largely positive, in spite of controversial debates concerning possible incentives and redistributive consequences (with the wage replacement scheme favoring middle and high income families). The introduction of partner months was also frequently criticized as an intrusion of the state into family life and parents' division of (care) work (Huebener et al 2016). Others were more nuanced in welcoming the two partner months as a bonus but stressing that the state should not prescribe families how to divide childcare and work between the parents by a more far-reaching quota (CDU/CSU 2007).…”