6. Family policies Flashcards
Family poilcies
Tool to try and reconcile the work of both parents with childcare responsibilities
Way to reduce cost of raising child
Affects labour supply but also decision to have a child
Types of family policies
Subsidized child care
Parental leave
Parental leave
Provide a period for the working mother to recover from giving birth - opportunity for her to bond with her new-born
Allows mother to stay attached to the labour market when raising children
In general: some (or all) wages during parents’ time off are also replaced
Marketization hypothesis
Key argument: family policies increase female labour force participation - improve position of women in the workplace
May give women greater bargaining power in the household
Marketization hypothesis: (Freeman and schettkat, 2005):
Women working creates demand for market substitutes for household production
-creates demand for labour producing these substitutes
- employment increases —-> added value increases —–> expenditure on subsidized childcare increases
Critique of family policies
Should public policies increase employment per se?
-May reduce welfare of individuals
Cross-country comparisons
Family policies differ across countries in three ways:
1) who provides them
- the government
-the private sector
2) generosity of the leave available to young mothers
3) degree to which policy designs encourage men’s engagement in caregiving
Cost of children
Average childcare costs in OECD countries: 13% of family disposable income of a two-children , dual earner couple on moderate earnings
Often higher among low-earning couples and single parents (makes sense because there is less income coming in but ‘minimum’ required to support child remains the same - so share of income spent on kids increases
Blau (2001)
Childcare programs can be organised along two-dimensions:
1) employment requirement of the program (no requirement to full-time parental employment)
2) quality of childcare required in order to be eligible for a subsidy
Boeri et al (2005) - informal childcare
Main reason for the low use of formal childcare - notably when this involves more than 30h use per week
There exists a social stigma against mothers putting children age 0-2 in kindergarten - reason there is such high use of informal childcare
Parental leave
Four types:
1) Maternity leave
2) Paternity leave
3) Parental leave
4) Home care leave
Maternity leave
Employment protected leave for employed women around the time of childbirth
Paternity leave
Employment protected leave for employed men in the first few months after child’s birth
Parental leave
Employment protected leave for employed parents - often supplementary to specific maternity or paternity leave
Home care leave
Employment protected leave allowing at least one parent to remain at home to provide care until the child is two or three years of age (usually following parental leave)
Gender equality
Further goal of family policies is gender equality:
-to promote a more egalitarian share of family responsibilities
- reduce gender asymmetries in the cost of labour for employers
- avoid negative perception that motherhood is associated with skill deterioration and lost opportunities for promotion
Empirical evidence - stylized facts
Huge increase in family participation in labour force
Employment rate of women strongly affected by presence of children in some but not all countries
Part-time work among female employees increases with number of children
Evidence - mothers with young children
Employment rate of mothers with children is lower than employment rate of women without children below age 15
Employment rate of mothers increases with age of youngest child
Increase is largest for mothers when the youngest child is at least three years of age
Having three or more children reduces the employment rate of mothers a lot
If mothers with children below 15 work - they do so full time
Part-time employment rate of mothers is below 10%
Evidence - childcare responsibilities
Single mothers have a higher employment rate than mothers in a couple
Differences between the labour market position of single mothers and married or cohabitating mothers are due to the trade-off between the need to make a living and the possibility of share some of the childcare responsibilities with a partner
Microeconomic evidence
Four types of studies:
- cash-for-care studies
Microeconomic evidence
Four types of studies:
- cash-for-care studies
- subsidizing childcare studies
- parental leave studies
- child penalty studies
Cash for care studies
Parents receive subsidies that they use as they think is best for them
Subsidising childcare studies
Focus is on employment of mothers and the welfare of children
Parental leave studies
Focus on employment of mothers and fertility
Child penalty studies
Focus on labour market position of young mothers shortly after giving birth to their first child
Piketty - 1998
Cash-for-care study
France, 1986 - policy to help parents raise children - APE
Allowance - 40% of median wage (60% of net minimum wage) for mother of at least 3 children - one of whom was younger than 3
1994: also for mothers of at least two children - one of whom was younger than 3
Mothers entitled for the birth of their second child - provided he was born after June 30, 1994
By 1997 - every mother with one child younger than 3 was entitled to the benefit
Naz - 2004
Norway: participation rate of partnered mothers
-75% if child < 3 years
- 83% if child 3-6 years
Cost of day care centres shared by state, municipalities and parents
1998: cash benefit of approximately 400 euros per month for parents with 1-3 year olds who did not use subsidised day-care facilities
Amount equivalent to state subsidy per child given to day-care centres
Main reason: freedom of choice in child rearing
Rules and regulations in Norway
52 weeks maternity leave with 80% wage (or 42 weeks with 100% wage)
Mother MUST take 9 weeks ( 3 before, 6 after) - father MUST take 4 weeks
1998: cash benefits (families with children age 1-3 years)
Bauernschuster and Schlotter - 2015
Policy reform in Germany - children from age 3 to school entry age became eligible for highly subsidized half-day public childcare
Kindergarten attendance of 3 years olds increased from 30% to 55% - while attendance of 4 year olds increased from 70% t o85%
Parental leave - Daddy month in Sweden
Sweden - 1995: reform of parental leave - introduction of daddy month:
- 1 month for fathers , 1 month for mothers - rather than two for parents
Parents choose how parental leave is split
Parental leave - Spain
Spain - 2007: two weeks of paid paternity leave were introduced - to be taken at the same time or immediately after maternity leave
Extended up to 8 weeks in 2020
Farré and Gonzalez - 2019
RDD to study effect of 2007 extension of paternity leave of fertility and labour market outcomes
Results:
- share of fathers taking leave increases from zero to almost 60%
- 4% greater employment rate of mothers six months after birth
- paternity leave had a negative effect on fertility
Should paternity leave be encouraged?
Good reasons:
- low employment rate of mothers
- parental leave can provide the right to return to previous job for women
Evidence seems to say that encouraging paternity leave has positive effect on the employment rate of young mothers:
-makes discrimination on basis of expected time out of labour market less likely
- stimulates less gender specific distribution of household activities in terms of childcare
- reduces time out of labour market —-> reduces deterioration of human capital
If two parents both have a child - who will take care of that child and who will pay for that care?
Three types of family policies:
- cash for care:
- subsidized childcare
- parental leave
Cash-for-care
Stimulate mothers to care for their young children themselves and stay out of labour market for a long period of time
Subsidized child care
EU countries provide public and heavily subsidized childcare
US has a childcare policy that is mainly private
Nordic countries spend more on both childcare subsidies and parental leave
Long-term outcomes for children are better served by good childcare facilities than by long parental leave periods
Parental leave
Interactions with other institutions
Equal opportunity legislation: important in reducing the risk that family policies induce employers to hire preferentially men over women
Working time regulations: part-time work allows parents to combine work and care
Education: educational attainment may benefit from early childhood interventions induced by childcare facilities
Active labour market policies: important interaction of policies targeted to women going back to work after maternity
Payroll taxes: relate to family policies with regards to income transfers to households and the independencies in labour supply decisions
Future of family policies
Countries struggle with appropriate policy response to reduce differences in labour market careers of mothers and fathers
Pandemic lead to more work from home —-> mixed blessing for mothers:
-working from home makes conciliation of work and care easier
- may also penalize labour productivity of mothers when childcare facilities are unavailable
