Long-Run Effects of Incentivizing Work After Childbirth
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Detroit, MI 48202
Department of Economics
George Washington University
This paper uses a panel of SSA earnings linked to the CPS to estimate the impact of increasing post-childbirth work incentives on mothers' long-run career trajectories. We implement a novel research design that exploits variation in the timing of the 1993 reform of the Earned Income Tax Credit (EITC) around a woman's first birth and in eligibility for the credit. We find that single mothers exposed to the expansion immediately after a first birth ("early-exposed") have 3 to 4 p.p. higher employment in the five years after a first birth than single mothers exposed 3 to 6 years after a first birth ("late-exposed"). Ten to nineteen years after a first birth, early-exposed mothers have the same employment and hours as late-exposed mothers, but have accrued at least 0.5 to 0.6 more years of work experience and have 4.2 percent higher earnings conditional on working. We provide suggestive evidence that these higher earnings are primarily explained by the increase in work experience, rather than a change in marriage, fertility, or occupation. Our results suggest that there are steep returns to work incentives at childbirth that accumulate over the life-cycle.