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Childcare Cash Benefits and Fertility Timing in Norway

Allocations familiales et calendrier de la fécondité en Norvège

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Abstract

In 1998 a new cash benefit for parents with young children was introduced in Norway. Its purpose was to provide a cash payment to parents who either preferred to care for their children at home or to compensate those who were not offered external childcare provision. It has been argued that the new policy encouraged women to stay at home with their children, possibly reducing labour supply. The policy was consequently considered gender-biased, creating reduced incentives for women to participate in the labour market and therefore encouraging a more traditional division of labour of husbands and wives. Given this background of the policy, we undertake an analysis in two parts. We ask first the question “who takes the cash benefit?” Second, by applying simple matching techniques, we ask the question “Do couples taking the benefit behave differently in terms of their fertility timing?” Using information from Norwegian registers we find that more traditional households (in a broad sense) are more likely to take the cash benefit. Those taking the benefit accelerate childbearing significantly, though the reasons why they do so varies by socio-economic groups.

Résumé

Une nouvelle allocation pour les parents de jeunes enfants a été introduite en 1998 en Norvège, dans le but de fournir un soutien financier aux parents préférant garder eux-mêmes leurs enfants à la maison, ou encore à ceux ne bénéficiant pas d’une place en crèche pour leur enfant. Certains ont émis l’hypothèse que l’octroi de cette allocation pourrait encourager les femmes à rester à la maison pour garder leurs enfants, et conduire à une réduction de l’offre de travail. Cette mesure a par conséquent été considérée comme biaisée en défaveur des femmes, du fait qu’elle réduirait leur motivation à participer au marché du travail, et irait dans le sens d’une conception plus traditionnelle des rôles des hommes et femmes. Dans ce cadre, nous avons effectué une analyse en deux parties. Dans un premier temps, nous posons la question: “qui bénéficie de l’allocation?”. Dans un second temps, à l’aide de techniques simples d’appariement, nous posons la question: “les couples bénéficiant de l’allocation se comportent-ils différemment des autres en matière de calendrier de la fécondité?”. En exploitant des informations extraites de registres Norvégiens, nous montrons que les ménages plus traditionnels (dans le sens le plus large) ont une probabilité plus forte de percevoir l’allocation. Ceux qui la perçoivent accélèrent significativement la procréation, pour des raisons variables en fonction du niveau socio-économique.

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Notes

  1. It is also possible to have part time kindergarten for their children and then receive a lower amount of cash-benefit. This combination is used for about 17% of the children receiving the cash-benefit.

  2. One month of the total length of the parental leave period of approximately one year is reserved for the father and cannot be transferred to the mother.

  3. This is of course a classic example of endogeneity. The standard approach to deal with the endogeneity issue is to implement an Instrumental Variable (IV) approach. However, this requires that we have access to a valid and relevant instrument in the sense that a variable exists that is correlated with the treatment variables but uncorrelated with the error term (assuming a parametric modelling scheme). However, in our setting there are no clear candidates.

  4. We have also estimated a simple linear regression (not shown here) using the full distribution of the number of months couples take the cash-benefit. The estimates are qualitatively similar.

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Acknowledgements

This research was supported by the Research Council of Norway, Grant Number 17105/V20, and Centre for Advanced Studies. We are most grateful for the support and advice provided by Øystein Kravdal, Nico Keilman and Marit Rønsen.

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Correspondence to Trude Lappegård.

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Aassve, A., Lappegård, T. Childcare Cash Benefits and Fertility Timing in Norway. Eur J Population 25, 67–88 (2009). https://doi.org/10.1007/s10680-008-9158-6

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