Working Paper: CEPR ID: DP12350
Authors: Anna Raute
Abstract: To assess whether earnings-dependent maternity leave positively impacts fertility and narrows the baby gap between high educated (high earning) and low educated (low earning) women, I exploit a major maternity leave benefit reform in Germany that considerably increases the financial incentives for higher educated and higher earning women to have a child. In particular, I use the large differential changes in maternity leave benefits across education and income groups to estimate the effects on fertility up to 5 years post reform. In addition to demonstrating an up to 22% increase in the fertility of tertiary educated versus low educated women, I find a positive, statistically significant effect of increased benefits on fertility, driven mainly by women at the middle and upper end of the education and income distributions. Overall, the results suggest that earnings-dependent maternity leave benefits, which compensate women commensurate with their opportunity cost of childbearing, could successfully reduce the fertility rate disparity related to mothers’ education and earnings.
Keywords: fertility; fertility gaps; paid maternity leave
JEL Codes: J13; J16; J18
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| maternity leave reform (J89) | birth probability among women earning above the median (J19) |
| maternity leave reform (J89) | additional births among highly educated women (J19) |
| €1000 increase in maternity leave benefits (J39) | birth probability (J19) |
| maternity leave reform (J89) | lasting impact on fertility behavior (J13) |