When Germany introduced generous parental leave benefits in 2007, higher-income households benefited relatively more from the reform than low-income households. Critics feared this would widen the socio-economic gap in child development as better educated mothers could delay their return to work and spend more time with their children.
However, a new IZA dicussion paper by Mathias Hübener, Daniel Kühnle and C. Katharina Spieß reveals no effects of the changes in parental leave benefits on child development across various socio-economic groups, and consequently no effects on socio-economic development gaps. The study is based on administrative data from mandatory school entrance examinations containing detailed child development assessments at age six.
This finding is good news, according to the authors, as other positive effects of parental leave would at least not be diminished by increasing social inequality in child development.
Fewer single mothers
An earlier IZA discussion paper by Kamila Cygan-Rehm, Daniel Kühnle and Regina T. Riphahn points to one of these positive effects: Since parental leave benefits are only paid to parents who live in the same household, the reform increased the likelihood that children grow up with both parents.
Comparing children who were born shortly before/after the parental allowance was introduced on January 1, 2007, the researchers found that the reform increased the probability that a newborn lives with non-married cohabiting parents. This goes along with a reduced incidence of single motherhood among the potential winners of the reform – an effect that persists over time.