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Parental Leave Benefits and Child Penalties

Discussion Papers 2016, 45 S.

Sevrin Waights


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I use the universe of tax returns in Germany and a regression kink design to estimate the impact of the benefit amount available to high-earning women after their first childbirth on subsequent within-couple earnings inequality. Lower benefit amounts result in a reduced earnings gap that persists beyond the benefit period for at least nine years after the birth. The longer-term impacts are driven by couples where the mother earned more than the father pre-birth. Simulations suggest it would take a 50% reduction in the benefit amount to completely eliminate long-run child penalties for sample couples. Lower benefits also reduce take-up of paid leave by mothers, lower the chances of having further children, and have no impact on marital stability.

JEL-Classification: D63;H31;J13;J16;K31;M52;Z13
Keywords: Child penalties, gender inequality in earnings, social norms, parental leave policy, regression kink design
Frei zugängliche Version: (econstor)