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Parents in the labour market

Parents in the labour market. March 18, 2009 Economics of the Family Helena Skyt Nielsen, Aarhus University. Outline. (1) Tour through this field of research The effect of parenthood on wages Skipper and Simonsen (2006) The effect of leave-taking on wages Albrecht et al. (1999)

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Parents in the labour market

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  1. Parents in the labour market March 18, 2009 Economics of the Family Helena Skyt Nielsen, Aarhus University A A R H U S U N I V E R S I T Y S c h o o l o f E c o n o m i c s a n d M a n a g e m e n t

  2. Outline (1) Tour through this field of research • The effect of parenthood on wages • Skipper and Simonsen (2006) • The effect of leave-taking on wages • Albrecht et al. (1999) • What drives the family-gap for women? • Nielsen, Verner and Simonsen (2004) • Family-friendly policies to reduce the family-gap • Datta Gupta, Verner and Smith (2008) • Simonsen (2008) • Nielsen (2009) (2) More details about • Causes and consequences of fathers’ child leave • Nielsen (2009) A A R H U S U N I V E R S I T Y S c h o o l o f E c o n o m i c s a n d M a n a g e m e n t

  3. The effect of parenthood on wages • Simonsen and Skipper (2006) • Data • Use a 5%-sample of the Danish population • Select 20-40 year-old men and women • Methodology: propensity score matching • Main Assumptions • CIA - Conditional independence • (distr.of outcome had he/she not had children=non-parent w/ same obs.char.) • P<1 – ’Common support’ • (prob to have a child<1) • Result • Average treatment effect on the treated • An estimate of the net effect of parenthood • …. incl the effect of childbearing on leave-taking, occupation etc A A R H U S U N I V E R S I T Y S c h o o l o f E c o n o m i c s a n d M a n a g e m e n t

  4. The effect of parenthood on wages • The propensity score should include variables influencing • Wages • Selection into parenthood • The propensity score depends on • Age • Detailed education categories • Education of the parents (in particular the mother) • The propensity score predicts parenthood quite well A A R H U S U N I V E R S I T Y S c h o o l o f E c o n o m i c s a n d M a n a g e m e n t

  5. A A R H U S U N I V E R S I T Y S c h o o l o f E c o n o m i c s a n d M a n a g e m e n t

  6. The effect of parenthood on wages • Result • Mothers earn 7.4% less than non-mothers • Fathers earn 6.0% more than non-fathers • Interpretation • Mothers (!) • …take long spells of leave in connection with child birth • …spend more time per day in home production • Fathers (?) • …providers work more? Work harder? Specialize in market work? • …providers have better outside opportunities? A A R H U S U N I V E R S I T Y S c h o o l o f E c o n o m i c s a n d M a n a g e m e n t

  7. The effect of leave-taking on wages • Albrecht et al. (1999) • Swedish data is well suited • Month-by-month event histories -> distinguish time out by reason • Parental leave -> both men and women take leave in Sweden • Coupled with employer reported wages • Data • Survey based information about cohorts 1949,54,59,64,69 • Information about 1600 women/600 men as of 1991/92. A A R H U S U N I V E R S I T Y S c h o o l o f E c o n o m i c s a n d M a n a g e m e n t

  8. The effect of leave-taking on wages • Albrecht et al. (1999) • Hypothesis: A negative effect of leave-taking is not only explained by skill depreciation, if • … different types of time out of work have different effects • … effects vary by gender • Methodology • Cross section estimation • Panel data estimations (to correct for omitted variable bias) • Results • The percentage reduction in wages as a consequence of X months of time out for reason Y • Coefficient estimates for the parameters of main interest… A A R H U S U N I V E R S I T Y S c h o o l o f E c o n o m i c s a n d M a n a g e m e n t

  9. A A R H U S U N I V E R S I T Y S c h o o l o f E c o n o m i c s a n d M a n a g e m e n t

  10. A A R H U S U N I V E R S I T Y S c h o o l o f E c o n o m i c s a n d M a n a g e m e n t

  11. The effect of leave-taking on wages • Results • Cross section • Different types of leave have different effects • Effects vary by gender • Panel data • Effects vary by gender • Interpretation • Consistent with a signaling game • Men – separating equilibrium • Women – pooling equilibrium A A R H U S U N I V E R S I T Y S c h o o l o f E c o n o m i c s a n d M a n a g e m e n t

  12. What drives the family-gap? • Nielsen, Simonsen, and Verner (2004) • Data • Like Simonsen and Skipper (2006) • Hypotheses • The family-gap is larger in the non family-friendly sector than in the family-friendly sector • Women who expect to have children self-select into the family-friendly sector to avoid the penalty A A R H U S U N I V E R S I T Y S c h o o l o f E c o n o m i c s a n d M a n a g e m e n t

  13. What drives the family-gap? • Methodology • Endogenous switching model A A R H U S U N I V E R S I T Y S c h o o l o f E c o n o m i c s a n d M a n a g e m e n t

  14. What drives the family-gap? • Channels • Experience foregone • actual experience, actual experience squared • Child penalty • mother dummy (plus interactions w/education) • Human capital depreciation • Duration of leave • Catch-up • Indicator variables for time since last birth-related leave A A R H U S U N I V E R S I T Y S c h o o l o f E c o n o m i c s a n d M a n a g e m e n t

  15. A A R H U S U N I V E R S I T Y S c h o o l o f E c o n o m i c s a n d M a n a g e m e n t

  16. A A R H U S U N I V E R S I T Y S c h o o l o f E c o n o m i c s a n d M a n a g e m e n t

  17. A A R H U S U N I V E R S I T Y S c h o o l o f E c o n o m i c s a n d M a n a g e m e n t

  18. What drives the family-gap? • Conclusion • Family-friendly policies drive the family-gap • Temporary family-gap in the public sector • Permanent family-gap in the private sector (not realised) • Who self-selects into the family-friendly sector? • Selection on observables (into the public sector) • Women who plan to become mothers • Women who would have been penalised much from having children in the private sector (may change sector later!) • Selection on unobservables • Postive selection • Sector choice based on comparative advantages • If the sector selection is ignored, the estimated family-gap is biased (overestimated) A A R H U S U N I V E R S I T Y S c h o o l o f E c o n o m i c s a n d M a n a g e m e n t

  19. Family-friendly policies to reduce the family-gap • Datta-Gupta, Verner and Smith (2008) • Nordic countries’ family-friendly policies • creates a ’system-based glass ceiling’ • no evidence of trade-off between child/family welfare and long leave • Family-friendly policies • Long maternity leave periods • High compensation rates • Job protection • Subsidized child care • Consequences • Positive effects • High LFP of women • Negative ’boomerang effects’ • Stagnation of the gender wage gap (widening at the top of the distribution) • Gender segregation • More detailed empirical analyses… A A R H U S U N I V E R S I T Y S c h o o l o f E c o n o m i c s a n d M a n a g e m e n t

  20. A A R H U S U N I V E R S I T Y S c h o o l o f E c o n o m i c s a n d M a n a g e m e n t

  21. A A R H U S U N I V E R S I T Y S c h o o l o f E c o n o m i c s a n d M a n a g e m e n t

  22. Family-friendly policies to reduce the family-gap • Simonsen (2008) • Purpose • Analyze the effect of • price of high quality daycare • guaranteed access to daycare • On female employment 5-15 months after birth • Data • 10% of Danish women, year 2001. • Income > ceiling for meanstesting of child care subsidy • Methodology • Estimation of employment probits month 5,6,..15 • Identification relies on variation in price and availability of child care across municipalities • Conclusion • Price and availability of daycare affects employment after birth A A R H U S U N I V E R S I T Y S c h o o l o f E c o n o m i c s a n d M a n a g e m e n t

  23. A A R H U S U N I V E R S I T Y S c h o o l o f E c o n o m i c s a n d M a n a g e m e n t

  24. A A R H U S U N I V E R S I T Y S c h o o l o f E c o n o m i c s a n d M a n a g e m e n t

  25. A A R H U S U N I V E R S I T Y S c h o o l o f E c o n o m i c s a n d M a n a g e m e n t

  26. Family-friendly policies to reduce the family-gap • Ekberg, Eriksson and Friebel (2005) • Daddy month • => fathers take two more weeks of leave on average • => mothers return 3-4 weeks faster to work • Advantage • Stronger incentive/force fathers to take leave if the household wants a leave period of a certain lenght • Disadvantage • Difficult to implement w/o increasing the total leave period • Nielsen (2009) • Economic incentives • => fathers take more leave • Advantage • Costless for the state as the total eligibility needs not change • Long-run social costs are ambiguous • Pos?: Children? Female careers? Gender equality gains? Work organization? • Neg?: Men vs. Women out of work? Intrahousehold welfare effects? A A R H U S U N I V E R S I T Y S c h o o l o f E c o n o m i c s a n d M a n a g e m e n t

  27. Conclusion • Mothers loose and fathers gain from parenthood • Fathers are penalized more for child leave than mothers • Optimal design of family-friendly policies • Child care • -> important for short run employment (return to work) • Duration of leave • -> important for long run employment and career • Economic incentives • -> important for leave-sharing A A R H U S U N I V E R S I T Y S c h o o l o f E c o n o m i c s a n d M a n a g e m e n t

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