Paid Parental Leave and Paternity Acknowledgement

Please send an email to Nadine Ketel or Paul Muller if you are interested to participate in this seminar (series).

Abstract: Paid Parental Leave and Paternity Acknowledgement Anna Raute (Queen Mary University of London)Andrea Weber (Central European University)Galina Zudenkova (TU Dortmund University)With a large shareof children growing up in single mother households and at risk of povertyit is important to understand how public policies affectfathers’involvementin childrearing. In this paper, weevaluate the impact of a major paid parental leave reformin Germany on the choice of relationship contracts of parents who were unmarried at conception.The reformsubstantially increased the average leave payments, in particular for working mothers, and lowered alimony payments for the non-resident father.Thus the reform reducedthe costs of acknowledgingpaternity, while itincreased the economic independence of the motherand increased investment into the child.We first develop a model of the choice of relationship contracts for couples unmarried at conception in which parents derive utility from private consumption, theirchild quality, and–in case they get married by the time the child is born–their marriage quality. We find that relationship choices are affected by monetary incentives from the parental leave benefits reform via alimony effectsand income effects, resulting in a shift from single motherhood to paternity acknowledgement.Using administrative birth records, wethen exploit a discontinuityin the reform implementation datecomparing childrenborn shortly before and after the implementation to identify causal effects. In contrast to widespread concernsthat public transfers might crowd out father involvement, we find thatincreasing support for motherssubstantially increasespaternity establishment. This overall surgewas driven by a reduction in the share of births to single mothersrather than a reduction in shot-gun marriages.JEL classifications:H42, I38, J12, J13, J16, J18Keywords: paid maternity leave, family structure, paternity establishmentOne sentence:Exploiting amajor paid maternityleave reformin Germany, we find that more generous financial support for mothers increased paternity acknowledgements in unmarried couplesby lowering the expected costs of for fathers. Joint with Andrea Weber and Galina Zudenkova