Working Paper: CEPR ID: DP12064
Authors: Natalia Danzer; Martin Halla; Nicole Schneeweis; Martina Zweimüller
Abstract: We provide a novel interpretation of the estimated treatment effects from evaluations of parental leave reforms. Accounting for the counterfactual mode of care is crucial in the analysis of child outcomes and potential mediators. We evaluate a large and generous parental leave extension in Austria exploiting a sharp birthday cutoff-based discontinuity in the eligibility for extended parental leave and geographical variation in formal childcare. We find that estimated treatment effects on long-term child outcomes differ substantially according to the availability of formal childcare and the mother's counterfactual work behavior. We show that extending parental leave has significant positive effects on children's health and human capital outcomes only if the reform induces a replacement of informal childcare with maternal care. We conclude that care provided by mothers (or formal institutions) is superior to informal care-arrangements.
Keywords: parental leave; formal childcare; informal childcare; child development; maternal labor supply; fertility
JEL Codes: J13; H52; J22; J12; I38
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Maternal Care Increase (J13) | Children's Health Outcomes (I14) |
| Informal Care Replacement (H55) | Children's Health Outcomes (I14) |
| Parental Leave Extension + No Formal Childcare (J22) | Improved Health Outcomes (I14) |
| Parental Leave Extension + Availability of Formal Childcare (J22) | Zero or Negative Effects on Health Outcomes (I12) |
| Parental Leave Extension (J22) | Children's Health Outcomes (I14) |
| Parental Leave Extension (J22) | Children's Human Capital Outcomes (I21) |