January 2008

IZA DP No. 3303: Market Work and Motherhood Decisions in Contexts

published in: Oxford Economic Papers, 2009, 61 (1), 147-171

In this paper, we explore the impact of social policies and labour market characteristics on women’s decisions regarding work and childbearing, using data from the European Community Household Panel (ECHP). We estimate the two decisions jointly and, in addition to personal characteristics, include variables related to the childcare system, parental leave arrangements, family allowances, and labour market flexibility. Our empirical results show that a non-negligible portion of the differences in participation and fertility rates for women from different European countries can be attributed to the characteristics of these institutions, and that the environmental effects vary by educational level. While labour market arrangements, such as part-time opportunities (when well-paid and protected), have a larger impact on the outcomes of women with higher educational levels, childcare and optional parental leaves have a larger impact on the fertility and participation decisions of women at lower educational levels.