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Economic incentives and the timing of births: Evidence from the German parental benefit reform 2007

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  • Henry Ohlsson, Michael Neugart and

    (Uppsala Center for Fiscal Studies)

Abstract

Economic theory suggests that incentives matter for people's decisions. This paper investigates whether this also holds for less self-evident areas of life such as the timing of births. We make use of a nautral experiment when the German government changed its parental benefit system January 1, 2007. The policy changes strongly increased economic incentives for women to postpone delivery to the new year provided that they were employed. The incentives for women not employed were not the same, they could gain slightly from giving birth before the policy change. Applying a difference-in-difference-in-difference approach, we find very strong evidence that women with an employment history near to the end of their term indeed succeeded to shift births and became subject to the new and more generous parental benefit system. We estimate the quantitative impact to correspond to a 5-6 percentage points increased probability to give birth the first seven days of 2007 rather than the last seven days of 2006 for employed women.

Suggested Citation

  • Henry Ohlsson, Michael Neugart and, 2009. "Economic incentives and the timing of births: Evidence from the German parental benefit reform 2007," Working Paper Series, Center for Fiscal Studies 2009:10, Uppsala University, Department of Economics.
    • Handle: RePEc:hhs:uufswp:2009_010
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    References listed on IDEAS

    as
    1. Jochen Kluve & Marcus Tamm, 2013. "Parental leave regulations, mothers’ labor force attachment and fathers’ childcare involvement: evidence from a natural experiment," Journal of Population Economics, Springer;European Society for Population Economics, vol. 26(3), pages 983-1005, July.
    2. Tamm, Marcus, 2013. "The Impact of a Large Parental Leave Benefit Reform on the Timing of Birth around the Day of Implementation," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 75(4), pages 585-601.
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    7. Gans, Joshua S. & Leigh, Andrew, 2009. "Born on the first of July: An (un)natural experiment in birth timing," Journal of Public Economics, Elsevier, vol. 93(1-2), pages 246-263, February.
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    9. Eliason, Marcus & Ohlsson, Henry, 2008. "Living to save taxes," Economics Letters, Elsevier, vol. 100(3), pages 340-343, September.
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    More about this item

    Keywords

    Timing of births; economic incentives; parental benefits; policy reform;
    All these keywords.

    JEL classification:

    • D19 - Microeconomics - - Household Behavior - - - Other
    • H53 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Welfare Programs
    • J13 - Labor and Demographic Economics - - Demographic Economics - - - Fertility; Family Planning; Child Care; Children; Youth
    • J18 - Labor and Demographic Economics - - Demographic Economics - - - Public Policy

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