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Incentives to work? The impact of a 'Cash-for-Care' benefit for immigrant and native mothers labour market participation

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  • Hardoy, Inés
  • Schøne, Pål

Abstract

To what extent is labour market participation of mothers sensitive to economic incentives? We answer this question by studying the effect on labour market participation of a Norwegian family policy programme that clearly has affected the incentives to participate in the labour market of mothers with small children. From January 1999, all parents with one- and two-year-old children who did not use publicly subsidised day-care became entitled to a benefit, 'Cash-for-Care' ('CFC'). The CFC reform has increased the price of publicly subsidised day-care relative to the price of own care. Economic theory of labour market participation postulates that the CFC reform would have a negative effect on labour market participation for the person most involved in childcare. The results show that the CFC reform has affected mothers' labour market participation negatively. The effects are much stronger for non-western immigrant mothers' than for native mothers. The results support the hypothesis that non-western immigrant mothers do react to changes in the relative prices of childcare and suggests that non-western female immigrants are quite responsive to changes in economic incentives.

Suggested Citation

  • Hardoy, Inés & Schøne, Pål, 2010. "Incentives to work? The impact of a 'Cash-for-Care' benefit for immigrant and native mothers labour market participation," Labour Economics, Elsevier, vol. 17(6), pages 963-974, December.
    • Handle: RePEc:eee:labeco:v:17:y:2010:i:6:p:963-974
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    2. Synøve N. Andersen & Nina Drange & Trude Lappegård, 2018. "Can a cash transfer to families change fertility behaviour?," Demographic Research, Max Planck Institute for Demographic Research, Rostock, Germany, vol. 38(33), pages 897-928.
    3. Lembcke, Franziska & Nöh, Lukas & Schwarz, Milena, 2021. "Anreizwirkungen des deutschen Steuer- und Transfersystems auf das Erwerbsangebot von Zweitverdienenden," Working Papers 06/2021, German Council of Economic Experts / Sachverständigenrat zur Begutachtung der gesamtwirtschaftlichen Entwicklung.
    4. Jochen Kluve & Sebastian Schmitz, 2014. "Social Norms and Mothers’ Labor Market Attachment – The Medium-run Effects of Parental Benefits," Ruhr Economic Papers 0481, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
    5. Tapio Räsänen & Eva Österbacka, 2024. "Subsidizing private childcare in a universal regime," Review of Economics of the Household, Springer, vol. 22(1), pages 199-230, March.
    6. Martin Cicowiez & Hans Lofgren & Ana Tribin & Tatiana Mojica, 2023. "Women's market and childcare policies in Colombia: policy simulations using a computable general equilibrium model," Philippine Review of Economics, University of the Philippines School of Economics and Philippine Economic Society, vol. 60(1), pages 65-98, June.
    7. Kluve, Jochen & Schmitz, Sebastian, 2014. "Social Norms and Mothers' Labor Market Attachment – The Medium-run Effects of Parental Benefits," Ruhr Economic Papers 481, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    8. Synøve N. Andersen & Nina Drange & Trude Lappegård, 2015. "Can a cash transfer to families change fertility behaviour?," Discussion Papers 800, Statistics Norway, Research Department.
    9. Schmitz, Sebastian & Kluve, Jochen, 2014. "Parental Benefits and Mothers Labor Market Outcomes in the Medium Run," VfS Annual Conference 2014 (Hamburg): Evidence-based Economic Policy 100567, Verein für Socialpolitik / German Economic Association.
    10. Michael J. Kottelenberg & Steven F. Lehrer, 2018. "Does Quebecs subsidized child care policy give boys and girls an equal start?," Canadian Journal of Economics, Canadian Economics Association, vol. 51(2), pages 627-659, May.
    11. Sebastian Schmitz & Jochen Kluve, "undated". "Social Norms and Mothers' Labor Market Attachment: The Medium-run Effects of Parental Benefits," BDPEMS Working Papers 2014001, Berlin School of Economics.
    12. Kluve, Jochen & Schmitz, Sebastian, 2014. "Social Norms and Mothers' Labor Market Attachment: The Medium-Run Effects of Parental Benefits," IZA Discussion Papers 8115, Institute of Labor Economics (IZA).
    13. Andersland, Leroy & Nilsen, Øivind A., 2016. "Households’ responses to price changes of formal childcare," Discussion Paper Series in Economics 20/2016, Norwegian School of Economics, Department of Economics.

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