Labour Supply and Incentives to Work in Europe

Labour Supply and Incentives to Work in Europe

Edited by Ramón Gómez-Salvador, Ana Lamo, Barbara Petrongolo, Melanie Ward and Etienne Wasmer

Labour Supply and Incentives to Work in Europe highlights recent developments in the labour supply in Europe and gives a detailed assessment of their link with economic policies and labour market institutions. Despite major changes in European labour supply during the past few decades, the existing literature still lacks a comprehensive study of the relationship between labour supply and labour market institutions from a macro perspective.

Chapter 4: Women’s Hours of Market Work in Germany – The Role of Parental Leave

Monika Merz

Subjects: economics and finance, labour economics


4. Women’s hours of market work in Germany: the role of parental leave Monika Merz1 INTRODUCTION The literature on female labour supply often departs from the presumption that in most industrialized countries women’s market hours worked have steadily risen since the early 1970s. A commonly quoted example is the experience of married women in the USA. Their average hours worked have risen by over 60 per cent during the last three decades (McGrattan and Rogerson, 1998, 2004). For married women with children this rise has been even more extreme. The secular increase in women’s hours worked has become the subject of a growing body of literature which uses dynamic economic models in an effort to explain the driving forces underlying this trend (see for example Olivetti, 2001, or Jones et al., 2003). Often quoted exceptions to the above-mentioned empirical observations are Germany, Italy and Spain where women’s total market hours worked have remained constant at best. Given that fertility in these countries has declined over the past thirty years and reached the bottom of the distribution in Europe, the observations on Germany, Italy and Spain are considered a puzzle, because at first glance it is hard to perceive why women who have few children do not participate more actively in the labour market. At second glance, there are likely candidates that may help explain the observed differences, such as child care availability, the income tax system, parental leave policies, the legal length of the work week, or the...

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