How the Paradigm Shift in Germany's Family Policy Affects Mothers' Labour Force Participation

Parental leave policies and child care programs are two means by which gender equality can be promoted. Designed properly they can reduce women’s burden of child care and facilitate female labour force participation (FLP). In most OECD countries, FLP has increased considerably over the last decades. However, in Germany this was accompanied by a continuous decrease of average working hours of mothers. Since 2005, both FLP and average working hours are increasing. In Germany, around this time a paradigm shift in family policy took place: two ambitious child care programs and an income-related parental leave benefit were introduced. This makes Germany especially interesting to study policy effects on FLP. Hence, we investigate if and how these new family policies have affected FLP in Germany – particularly in the group of mothers with toddlers.

Two data sets and different analytical techniques are applied to assess the effects of both policy reforms. Based on the Socio-economic Panel (SOEP) we apply event history techniques to analyse the effect of the parental leave reform of 2006 on the labour force participation of mothers on individual level. Regional data for the years 1996 to 2012 were used to analyse the determinants of the FLP of mothers with toddlers on district level by applying changing rate regressions for the years of child-care facilities expansion. Results of the SOEP analysis show, that the parental leave reform caused an increase of FLP after the 12th month of a child. However, this effect only exists for the first but not for the second child. The regional analyses show that the different tempo of expanding child-care facilities affects recent changes in FLP. However, the results show that policies which are supposed to stimulate gender equality strongly depend on the cultural background and the economic structure of the regions.