Back to work or stay at home? Family policies and maternal employment in Finland. Published OPEN ACCESS ONLINE FIRST in the Journal of Population Economics by Eva Österbacka & Tapio Räsänen.

A new GLO Discussion Paper finds for Finland that higher private day care allowances have no effect on employment while higher home care allowances increase the length of home care.

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Back to work or stay at home? Family policies and maternal employment in Finland.

by Eva Österbacka & Tapio Räsänen

Published OPEN ACCESS ONLINE FIRST in the Journal of Population Economics.

Author Abstract: The employment effects of family policies depend on the mother’s labor market attachment and on the age of the child. We study the effects of child home care (cash-for-care) and private day care allowances on mothers’ return to employment after childbirth. Our identification strategy exploits changes in municipal-level subsidies. We find that higher private day care allowances have no effect while higher home care allowances increase the length of home care. A 100-euro higher level of home care allowance prolongs home care by 2–3 months, on average. The home care allowance combined with low labor market attachment and low earnings potential pre-birth delay the return to employment. However, the effect of the allowance diminishes over time. Higher subsidies have no impact by the time a child turns two. Reductions in subsidies stimulate a faster return to employment.

GLO Discussion Papers are research and policy papers of the GLO Network which are widely circulated to encourage discussion. Provided in cooperation with EconStor, a service of the ZBW – Leibniz Information Centre for Economics, GLO Discussion Papers are among others listed in RePEc (see IDEAS,  EconPapers)Complete list of all GLO DPs – downloadable for free.

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