Ms. Özdemir, policymakers try to help women combine children and career by subsidizing
childcare. How effective are such measures?
Our research explains why childcare subsidies might fail to create a significant “baby
boom”. Some mothers make these choices long before they have children and steer toward
family-friendly careers because they already know they want to spend a lot of time with
their future children. Others decide to have fewer children and focus on their careers
instead. For these decisions, subsidies are unlikely to make much difference. Instead of
having more children, some parents use the extra budget to improve the quality of care and
education for the children they already have. If the goal is higher fertility, policymakers
need to be realistic and take into account the strategic decisions by women described
above.
How do women manage to strike a balance when combining children and careers?
Yasemin Özdemir: We find that women are extremely effective optimizers: High-earning
mothers mitigate career costs by substituting their own time with purchased childcare
services, while others use the work flexibility in sectors such as education or social work to
spend more time with their children. The latter often have more children than mothers
working in high-pressure jobs. We conclude that women are experts at navigating the
trade-offs between kids and career according to their individual preferences. Our most
surprising finding is that the lifetime income loss from women deliberately choosing a
“family-friendly” sector is very small. It accounts for approximately 2.5 percentage points of
the total child penalty, which comprises the earnings loss women face relative to men
between one year prior to and eight years after the birth of their first child. Our finding is
unexpected because “family-friendly” sectors generally pay less.
Part-time employment among women is a notable feature of the German economy. What
would need to happen to have more full-time employment?
In Germany, “successful parenting” is often understood as requiring either a great deal of
parental time or substantial spending on childcare. As long as this is the case, women will
continue to self-select out of family-unfriendly sectors or limit their family size. Any effort
to address the high share of part-time work among women must consider how policy
affects both the time and financial demands of raising children.