Welfare Reforms and the Division of Parental Leave

We study the design of parental leave systems through lens an estimated model parents’ joint willingness to pay for leave. estimate using Danish register data on almost 200,000 births combined with sharp variation in economic incentives created by benefit system. The reproduces empirical distribution leave, including bunching at kinks household budget sets and a large share fathers taking little or no all. provide menu counterfactual policy simulations showing substantial interaction effects between earmarked replacement rates duration benefits. For example, introducing 9 weeks as stipulated recent EU directive, low rate increases only slightly, while it reduces mothers significantly our model. Finally, we discuss efficiency costs different policies aimed increasing fathers.