Can Family-Support Policies Help Explain Differences in Working Hours across Countries? Urban Sila (January 2009)

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Presentation transcript:

Can Family-Support Policies Help Explain Differences in Working Hours across Countries? Urban Sila (January 2009)

Motivation Total working hours: participation & how much employed people work. There are large differences in total working hours per person across countries In the US 40% higher than in Belgium, Germany or France. Also within Europe differences are large! (UK 30% higher). Important to understand what determines working hours Determinant of labour supply. Welfare (leisure/work).

Place in the literature Taxes (Prescott (2004)) Tax rates can explain differences between US and Europe Taxes and social policies (Rogerson (2007)) It is also important how tax receipts are used. Suppose government subsidizes childcare on the market (Scandinavia). Then it is encouraging parents to work. This literature is based on simulations of calibrated macroeconomic models. I focus on family policies. What is the reasoning behind these models? (who is affected by the benefits) What is in the data?

My approach - theory I focus on two policies: Childcare subsidies and Family cash benefits. I distinguish between parents and non-parents. In a simple model: In aggregate: Childcare subsidies increase working hours, Effects differ between parents and nonparents. Childcare subsidies increase and cash benefits decrease working time of parents. Both increase working time of nonparents (via reducing the lump sum subsidy).

My approach - empirical I test predictions from the model empirically. I use individual level data: (European Community Household Panel) and (US CPS) + country level variables on family support policies, taxes etc. from OECD 13 EU countries + the US Cross country analysis - focus on the year 2000

Effects on working hours - aggregate

Effects on working hours – parents/nonparents

Further analysis Results not consistent with the theory. Similar results when splitting the sample into males/females. No expected effects on time in childcare at home. Surprisingly strong (and negative) effects on time in childcare for old people (“grandparents”).

Conclusion Family support policies are not helpful in explaining the variation in working hours across countries. Any effects disappear after including other institutional indicators. Why? (potential answers): Family support policies are simply not important enough. There is some indication that they relieve the childcare burden of grandparents – hence they cannot largely influence working hours.