Long-Run Effects of Incentivizing Work After Childbirth
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 5 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 0.5 to 0.6 more years of work experience and have 6 percent higher earnings. Incorporating long-run effects on EITC benefits and earnings increases the implied marginal value of public funds (MVPF) of the expansion. Our results suggest that there are steep returns to work incentives at childbirth that accumulate over the life-cycle.
We thank Jacob Bastian, Marianne Bitler, David Card, Liz Cascio, Janet Currie, Nathaniel Hendren, Hilary Hoynes, Henrik Kleven, Pat Kline, Erzo Luttmer, Maya Rossin-Slater, Jesse Rothstein, Emmanuel Saez, and Dmitry Taubinsky as well as seminar audiences at Brown, Dartmouth, George Washington University, Stanford, University of Ottawa, UC Berkeley, UC Davis, UC Santa Cruz, and the NBER Children's Meeting for helpful comments. We also thank Lynn Fisher, Thuy Ho, and Richard Chard at SSA for their help accessing the data and with the disclosure review process. This research was supported by the U.S. Social Security Administration through grant #5 DRC12000002-06 to the National Bureau of Economic Research as part of the SSA Disability Research Consortium. The findings and conclusions expressed are solely those of the author(s) and do not represent the views of SSA, any agency of the Federal Government, or the National Bureau of Economic Research.