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University of Stavanger UiS Working Papers in Economics and Finance

No 2012/3:
Crowding out Dad? The Effect of a Cash-for-Care Subsidy on Family time Allocation

Nina Drange ()

Abstract: This paper expands our understanding of possible specialization effects of extended parental leave policies. Identification is based on the introduction of the Cash-for-Care program in Norway in 1998, which increased mothers’ incentives to withdraw from the labor market when their child was one and two years old. I estimate difference-in-differences models exploiting differences in individuals' exposures to the program among families with similar structures. Consistent with Schøne (2004) I find that the cash-for-care program decreased mothers’ labor force participation by about four percentage points. Notably, however, I find no evidence that the fathers work more to compensate for the mothers declined labor supply.

Keywords: .; (follow links to similar papers)

JEL-Codes: J13; J22; J24; (follow links to similar papers)

35 pages, March 2, 2012

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