Katharina Wrohlich: Peer Effects in Parental Leave Decisions

OFS seminar at Statistics Norway. Dr. Katharina Wrohlich is the deputy head of the public economics department at The German Institute for Economic Research (DIW Berlin).

Photo: DIW Berlin

Wrohlich will present her paper «Peer Effects in Parental Leave Decisions», written jointly with Clara Welteke.

Abstract:

This paper analyzes to what extent parental leave decisions of mothers with young children depend on the decisions made by their coworkers. In particular, we study peer effects at the workplace in the context of maternal leave behavior in Germany.  Peer effects, which are defined as indirect effects of the behavior of a social reference group on individual outcomes, can result from a preference for conformity to social norms or the revelation of information about the consequences of a certain behavior. The identification of peer effects bears various challenges due to correlated characteristics within social groups and endogenous group membership. We overcome these challenges by exploiting quasi-random variation in the costs of parental leave in a narrow window around a cutoff date, induced by a parental leave benefit reform in January 2007, which encourages mothers to remain at home in the first 12 months after childbirth. Administrative linked employer-employee panel data (LIAB) enables us to assign a peer group to all individuals who work in the same establishment and occupational group. The identifying variation stems from the exposure of our sample to peer mothers who gave birth within a narrow window either before or after the parental leave benefit reform. While there is a growing literature on peer effects, few studies have yet looked at peer effects in the context of parental leave decisions. We argue, however, that mothers with young children are particularly susceptible to peer behavior at the workplace due to social conformity as well as career-related uncertainty that young mothers face. Our results suggest that mothers' decisions on the length of parental leave are significantly influenced by their coworkers' decisions. We find that a mother is 41 percentage points more likely to stay at home in first year if her peer mother(s) decide to do so as a response to the parental leave benefit reform.

Published Apr. 8, 2016 2:27 PM - Last modified June 6, 2016 11:56 AM