Parental Benefits and Maternal Labour Supply: Evidence from Germany (thesis)

Abstract

This paper aims to estimate the effects of a reduction in the size of parental benefits in the second year after birth on maternal labour supply. I exploit exogeneous variation in the size of benefits that occurred due to reforms of the parental benefit system on the national and federal state level in Germany. The reforms led to reductions in the size of benefits depending on the household type and state. I compare household types that experienced different changes in benefits, even though they are similar with regard to all relevant characteristics in a differences-in-difference regression matching framework. My results indicate that there is a robust negative effect of the size of the allowance on maternal labour supply. The estimate for full-time employment is large and close to being significant at the ten percent level.