The effects of family policy on maternal labor supply: Combining evidence from a structural model and a quasi-experimental approach

• We analyze the effects of family policy instruments on maternal labor supply
• The evaluation is based on a structural model and on quasi-experimental methods
• Both methods show that parental leave benefits affect employment of mothers
• Combining parental leave and subsidized child care increases maternal labor supply

Parental leave and subsidized child care are prominent examples of family policies supporting the reconciliation of family life and labor market careers for mothers. In this paper, we combine different empirical strategies to evaluate the employment effects of these policies for mothers with young children. In particular we estimate a structural labor supply model and exploit quasi-experimental variation from a parental leave reform in Germany. Our findings suggest that a combination of parental leave benefits and subsidized child care leads to sizable employment effects of mothers.