The effects of family policy on mothers’ labor supply: Combining evidence from a structural model and a natural experiment

Thus, the introduction of the new benefit scheme can be evaluated by a comparison of the employment behavior of a treatment and a control group: the treatment group consists of mothers who gave birth in the first quarter of 2007, and the control group consists of mothers who gave birth in the fourth quarter of 2006.12 More formally, we estimate the labor supply (ls) of mothers with a child in the. [...] The income tax of a married couple is calculated by applying the tax function to half of the sum of the spouses’ incomes; the tax is then doubled to determine the tax liability of the couple. [...] In a similar way, as described above, we use the results of the structural model to evaluate the labor supply effects of the introduction of the parental leave reform in 2007: We calculate the net income of all households under the counterfactual parental leave scenario and predict the induced labor supply behavior of mothers. [...] Results of the Evaluation of the Natural Experiment In the following, we discuss the results of the estimation exploiting the natural experi- ment. [...] The first one is the amount of the personal net income, the second one on the amount of the household net income.