Employment Decisions of European Women After Childbirth

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

2. 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?

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

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

5. 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)

6. 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

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

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

9. Samples

10. 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)

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

12. 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)

13. Post-birth fertility:Descriptive Statistics

14. 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)

15. Maternity and parental leaves in Europe

16. Childcare services in Europe

17. Characteristics of the Environment

18. Cross-country comparison

19. 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