The Willingness to Pay for Job Amenities: Evidence from Mother's Return to Work

Abstract

How can we encourage unused work potentials, such as young mothers, to participate in the labor market? This study addresses this issue by providing a direct measure for the relevance of job-related amenities for mothers work decision. It is the first study to directly estimate mothers’ marginal willingness to pay (MWP) for job amenities. Its identification strategy relies on German maternity leave length data. A theoretical model of the leave length decision is derived from a random utility approach. Using data from the German Socio-Economic Panel and the Qualification and Career Survey, the model is estimated by a discrete duration method that assumes a logistic hazard function. The MWP for amenities can be inferred through the estimated elasticities of the leave length with respect to the disamenities and the wage. The results provide evidence that mothers are willing to sacrifice a significant fraction of their wage to reduce hazardous working conditions (more than 20% for a decrease of one standard deviation) and to enjoy a working schedule compatible with available daycare (more than 35%).