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Improving the Reconciliation of Familiy and Work Through a New Wage Benefit for Family Working Time

Press Release of November 13, 2013

According to current survey results the reconciliation of family and work is still very difficult for a lot of parents. Most parents seek to share gainful employment and family duties more equally. Yet, financial incentives often favor the conventional single- or one and a halfearner model. In a study commissioned by the Friedrich Ebert Foundation and the Hans Bockler Foundation DIW Berlin has investigated the behavioral effects and related costs of a new benefit for 'family working time' which is intended to support a more fair division of care work and employment within the household. This subsidy is intended for parents with children aged between one and three years and can be received when both spouses decide to work in 80 % of a regular full time job which corresponds on average to about 32 hours per week. The benefit is differentiated by earned income and is relatively larger for low income households. The study reveals that the share of couples with both spouses working 80% of a full time job which is currently about one per cent could be roughly doubled by this benefit. Fiscal costs would be moderate in the short run. If such a reform, however, leads to a change in social norms towards a more equal division of employment and care work within households, more couples would be encouraged to choose this working hours arrangement and thus the long-term costs would increase.