September 1998

IZA DP No. 21: The Liberalisation of Maternity Leave Policy and the Return to the Work of Childbirth in Germany

published in: Review of Economics of the Household, 2003, 1 (1-2), 77-110

German federal law has increased the potential duration of maternity leave five times since 1985. A theoretical model is presented that demonstates that the return to work hazard rate declines a potential increases and the cumulative return probability a potential duration cannot decline unless the mothers employment condition or career expectation can change. Return to work hazard are estimated from the German Socio-Economic Panel for women bearing children in Germany in the period 1984-1991. The estimates are used to predict hazards and cumulative return probabilities for first time mothers and mothers with a previous birth. As potential duration increases, the cumulative return rate pattern with potential duration is consistent with the hypothesis that employment conditions and career expectations frequently change for mother taking longer leaves.