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Paternity leave and the gender gap in pay and earnings

Periodic Reporting for period 1 - PAGE (Paternity leave and the gender gap in pay and earnings)

Reporting period: 2018-03-01 to 2020-02-29

The project examines the impacts on inequality in society (gender inequality and social inequality) of two types of family policy: paid parental leave and early childhood education and care (ECEC). The main project looks at paid parental leave: Q1 asks whether differences in the monthly benefit amounts can impact on gender inequality in earnings in couples in Germany. The gender pay is understood to be largely a motherhood penalty. Upon entering parenthood mother earnings drop enormously whereas fathers do not. Therefore policymakers look to parental leave policy as a potential level for addressing earnings inequalities between genders. The project examines the whether changes to the benefit amount for mothers (or fathers) may change the division of parental leave with potentially long term impacts on careers paths, and important policy implications. Three additional projects look at ECE. Research shows that attendance can improve early childhood development measured by cognitive and non-cognitive skills that are strongly predictive of later life outcomes such as earnings. Previous studies have shown that these beneficial effects are greatest for children from less advantaged backgrounds. As such ECEC programmes have the potential to reduce social inequalities by addressing imbalances early on. Q2 asks why children from less advantaged background have lower enrolment rates in ECEC. Such enrolment gaps are well documented across many countries and stand in the way of ECEC addressing social inequalities. I examine whether it is differences in demand by parents, or differences in accessibility that explain the gap. The results aim to have important implications for the design of ECEC policy. Q3 asks if ECEC enrolment impacts the quantity and quality of time spent together with parents in the home environment. This questions address the reasons why ECEC is beneficial for child development. Previous research has put the focus on the learning environment in the institution, however, this project looks at impacts on the home environment as an alternative mechanism. A better understanding of the mechanisms for observed child development effects can help improve ECEC design. Finally, Q4 look at ECEC (and school) closures resulting from the Covid-19 pandemic and how they impacted on the gender division of child care and housework in families.
The findings for the main project (Q1) are in the process of being written up and have been presented at several conferences and seminars. The results so far suggest that decreased monthly benefit amounts for mothers, that arise due to the cap in benefits, reduce earnings gender inequality in the couple in the leave period and in some cases this effect persists into the long-run. The results on Q2 are now published in the Journal of Public Economics. In short, they suggest that differences in parental demand do only explain a part of the enrolment gaps for children whose mothers have lower educational attainment. The rest of the gap can be explained by policy factors that influence accessibility. The enrolment gaps are made bigger in the presence of large local shortages of places, and parental contributions to fees. Interpreting these results suggests that when getting ECEC places is competitive it is better resourced parents who are able to secure scarce spots. Further, even though fees are income adjusted, they are enough to put off less well resourced parents. For children whose parents are migrants, the results are very different: there are no differences in demand, and neither shortages nor fees seem to affect the sizeable enrolment gap. Here evidence suggests that making ECEC more welcoming for children of difference cultures and religions may be helpful. The results of Q3 are published as a discussion paper and have been presented at several conferences and seminars. The paper is under view at a journal. The time use data show that attending ECEC results in a decrease in the time that parents' spend with the enrolled child (logically) but not such a large decrease in the time spent on specific activities with the child such as reading, talking and playing. As a result the quality of the overall time with the child does up on this measure with possible implications for child development. This effect is largest for children with mothers with lower education attainment perhaps providing an additional explanation for greater development effects recorded in the literature. Finally, the results of Q4 suggest that the school and day care closures associated with the pandemic mostly increased gender inequality in the sharing of care work in the home.
The four papers significantly progress the state-of-the-art in terms of the methods used and knowledge created. All three questions make progress applying cutting edge methods such as a synthetic control and a regression kink design to provide new evidence on important questions. As such they provide benefits for research and science. Furthermore, they provide benefits for society in terms of policy knowledge. The main project provides the first causal evidence on the impacts of parental leave benefits amounts of gender inequality in earnings. This could potentially be an important policy lever for addressing the motherhood penalty and the gender pay gap. The second project provides the first thorough explanation of why enrolment gaps exist in universal ECEC systems. If policymakers wish to address societal inequality there are direct implication such as eliminating parental contributions and ensuring sufficient spaces for children of all cultures and religions. The third project provides a new potential channel for explaining child development impacts of ECEC. If policymakers wish to strengthen the child development impacts that they could pay attention to the home environment channel e.g. by making interaction between staff and parents a more systematic feature of ECEC programmes. Finally, the fourth project provides insights into the gender impacts of the pandemic and restrictions with important implications for policy focussed on improving gender equality.