February 2019

IZA DP No. 12145: Parental Child Care Time, Income and Subjective Well-Being: A Multidimensional Polarization Approach for Germany

Joachim Merz, Normen Peters

Neither market income nor consumption expenditure provides an adequate picture of individual standard of living. It is time which enables and restricts individual activities and is a further brick to a more comprehensive picture of individual well-being. In our study we focus on a prominent part of time use in non-market services: it is parental child care which contributes not only to individual but also to societal well-being. Within a novel approach we ask for multidimensional polarization effects of parental child care where compensation/substitution of time for parental child care versus income is interdependently evaluated by panel estimates of society's subjective well-being. The new interdependent 2DGAP measure thereby provides multidimensional polarization intensity information for the poor and the rich and disentangles the single time and income contribution to subjective well-being for targeted policies ensuring at the same time the interdependence of the polarization dimensions. Socio-economic influences on the polarization pole risk and intensity will be quantified by two stage Heckman estimates. The analyses are based on the German Socio-Economic Panel with 21 waves and robust fixed effects estimates as well as the German Time Use Surveys 1991/92 and actual 2012/13 with detailed diary time use data. Prominent result: compensation between parental child care time and income proved to be significant, but there are multidimensional regions with no compensation, where parental child care time deficit is not compensated by income. Interdependent multidimensional polarization by headcount and intensity increased significantly over the twenty years under investigation with remarkable risk and intensity differences.