6. Family policies

Question 1

Family poilcies

Answer 1

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

Question 2

Types of family policies

Answer 2

Subsidized child care
Parental leave

Question 3

Parental leave

Answer 3

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

Question 4

Marketization hypothesis

Answer 4

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

Question 5

Critique of family policies

Answer 5

Should public policies increase employment per se?

-May reduce welfare of individuals

Question 6

Cross-country comparisons

Answer 6

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

Question 7

Cost of children

Answer 7

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

Question 8

Blau (2001)

Answer 8

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

Question 9

Boeri et al (2005) - informal childcare

Answer 9

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

Question 10

Parental leave

Answer 10

Four types:
1) Maternity leave
2) Paternity leave
3) Parental leave
4) Home care leave

Question 11

Maternity leave

Answer 11

Employment protected leave for employed women around the time of childbirth

Question 12

Paternity leave

Answer 12

Employment protected leave for employed men in the first few months after child’s birth

Question 13

Parental leave

Answer 13

Employment protected leave for employed parents - often supplementary to specific maternity or paternity leave

Question 14

Home care leave

Answer 14

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)

Question 15

Gender equality

Answer 15

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

Question 16

Empirical evidence - stylized facts

Answer 16

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

Question 17

Evidence - mothers with young children

Answer 17

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%

Question 18

Evidence - childcare responsibilities

Answer 18

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

Question 19

Microeconomic evidence

Answer 19

Four types of studies:
- cash-for-care studies

Question 20

Microeconomic evidence

Answer 20

Four types of studies:
- cash-for-care studies
- subsidizing childcare studies
- parental leave studies
- child penalty studies

Question 21

Cash for care studies

Answer 21

Parents receive subsidies that they use as they think is best for them

Question 22

Subsidising childcare studies

Answer 22

Focus is on employment of mothers and the welfare of children

Question 23

Parental leave studies

Answer 23

Focus on employment of mothers and fertility

Question 24

Child penalty studies

Answer 24

Focus on labour market position of young mothers shortly after giving birth to their first child

Question 25

Piketty - 1998

Answer 25

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

Question 26

Naz - 2004

Answer 26

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

Question 27

Rules and regulations in Norway

Answer 27

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)

Question 28

Bauernschuster and Schlotter - 2015

Answer 28

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%

Question 29

Parental leave - Daddy month in Sweden

Answer 29

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

Question 30

Parental leave - Spain

Answer 30

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

Question 31

Farré and Gonzalez - 2019

Answer 31

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

Question 32

Should paternity leave be encouraged?

Answer 32

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

Question 33

If two parents both have a child - who will take care of that child and who will pay for that care?

Answer 33

Three types of family policies:
- cash for care:
- subsidized childcare
- parental leave

Question 34

Cash-for-care

Answer 34

Stimulate mothers to care for their young children themselves and stay out of labour market for a long period of time

Question 35

Subsidized child care

Answer 35

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

Question 36

Interactions with other institutions

Answer 36

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

Question 37

Future of family policies

Answer 37

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