Impact of Family Policies on Gender Inequality in Austria Studied in NBER Paper Coauthored by Associate Johanna Posch

December 8, 2020

The impact of family policies on the gender earnings gap is the focus of “Do Family Policies Reduce Gender Inequality? Evidence from 60 Years of Policy Experimentation,” a study recently published in the NBER Working Paper Series. Analysis Group Associate Johanna Posch and her coauthors analyzed the effects of family policies such as parental leave and child care on the dynamics of male and female earnings. Using administrative data covering the labor market and birth histories of Austrian workers from 1953 to 2017, the authors examined the introduction and expansion of public policies supporting families with children over this period.

The authors found that longer parental leaves in Austria had negative effects on mothers’ earnings in the short run, but did not negatively impact their earnings in the long run despite a mother’s absence from the labor force. They also found that large expansions of locally provided subsidized child care did not reduce the gender earnings gap. The authors provided evidence suggesting that this may be due  at least partially to the use of informal care arrangements, for which subsidized formal child care substitutes. Strong norms in favor of maternal care in Austria, which are not easily affected by an expansion of subsidies, also play an important role.

In considering policy implications, Dr. Posch cautions that the study focused solely on earnings effects of family policies in Austria, and may not be generalizable to other countries with different norms for maternal care.  She also points out that it did not examine other impacts of expanding family policies such as effects on child development, especially for children from a less privileged background.

The Wall Street Journal’s Editorial Board cited the research in its op-ed “A Family Policy Warning.”

Read the NBER working paper