Claudia Troccoli (Åbo Akademi University)
Eva Österbacka
Part-time work may affect future labor market outcomes and fertility choices. The possibility of working part time reduces the costs of childcare leave if the mother had stayed home for a longer time without the part-time opportunity. On the other hand, the costs of childcare leave increase if the mother had returned to full-time work without the part-time opportunity. Variations in childbearing costs can have consequences for labor market outcomes. Part-time work with young children may also affect future outcomes in the labor market. We use the 2014 reform of the part-time parental allowance in Finland to empirically estimate the causal effects of working part time on labor market outcomes. We compare mothers who had a child from 2011, entitled to the more generous part-time allowance (partial or full entitlement), with those who had a child at the latest in 2010, not entitled. We analyze mechanisms for the heterogeneous results by studying earnings dynamics over a longer period, employment and unemployment spells, and fertility outcomes.