Employment Decisions of European Women After Childbirth Chiara Pronzato (ISER) EPUNet Conference, May 9th 2006

Aims What do women do after childbirth? How long do they take to start working? Which characteristics of the woman, the household and the environment make more likely the decision to work after the childbirth? How does the social environment (childcare and parental leave arrangements) affect mothers’ participation behaviour?

Motivations Development of human capital – financial independence Higher female participation (and fertility) to maintain the welfare system (EU objective)

Outline 1) Estimation of the determinants of post-birth employment, separately for each country 2) Simulation of a NEW sample for each country, by using its own estimated parameters and statistics 3) Introduction of the characteristics of the environment in a dataset which comprises all NEW samples

Post-birth employment: The methodological framework Maximization of household lifetime utility: at any moment, she decides to participate in the labour market if offered wage > reservation wage her productivity her productivity at home in the labour market (number and ages of her (human capital) children)

Post-birth employment: The methodological framework when time passes by… the probability to be employed is decreased by the loss in human capital which affects her potential wage and increased by the loss in her productivity at home (due to child’s age) which impacts on her reservation wage

Post-birth employment: The methodological framework X: woman’s characteristics H: household’s characteristics E: economic environment J: time elapsed from the childbirth

Sample selection European Community Household Panel (ECHP) childbirth Work? Yes Work? No

Samples

Variables in the model X: woman’s potential wage H: household income (social transfers, private income, male/grandparents earnings) lone mother/ extended family first childbirth, other kids born along the spell E: regional unemployment rate (REGIO) t: time elapsed from the childbirth (T-1)

Variables in the model childbirth First childbirth? Potential wage Work? Yes Work? No Time elapsed from the childbirth Lone mother? Extended family? Other kids? Household income – Unemployment rate

Post-birth employment: Results Positive effect of the potential wage the extended family (ES, EL, LU) the first childbirth compared to the subsequent ones the time from the childbirth (GE, DK, UK, FI) Negative effect of the household income being a lone mother (NL, BE, UK, PT) other kids born during the spell regional unemployment the time from the childbirth (NL, BE, LU, IT)

Post-birth fertility: Descriptive Statistics

Simulation of NEW samples According to the country specific estimated parameters, we simulate the probability to be still inactive for a group of women, given the possible combinations of these characteristics  Potential wage (3 levels)  Child aged between 0 and 3  Family structure (3 possibilities)  Household income (3 levels)  First childbirth (2 possibilities)  Other kids (2 possibilities)  Unemployment rate (2 levels)

Maternity and parental leaves in Europe

Childcare services in Europe

Characteristics of the Environment Child 0-2Child 3 Leave (low educ) ** Leave (medium) ** Leave (high) Childcare ** North ** South Constant ** **

Cross-country comparison

Summary Amount of time that mothers take to return to work: heterogeneity among countries Most of the difference in post birth participation in Europe is due to differences in labour market participation among less educated women Stronger effect of woman’s human capital in South Europe Women in countries with long parental leave tend to take advantage of it delaying their return (not highly educated ones) Women in countries with high availability of childcare services tend to start working sooner When the child is 3, these environmental characteristics do not seem to affect mothers’ labour market participation anymore