Women’s Hours of Market Work in Germany: The Role of Parental Leave

This paper investigates trends and changes in the structural composition of women’s weekly market hours in former West-Germany using aggregate time-series data from German micro census from 1957 until 2001. Aggregate weekly hours per working-age woman are decomposed into hours worked per employee – the intensive margin of adjustment – and into labor force participation – the extensive margin. The decomposition is performed by women’s marital status, their age, and whether or not young children are present. The main results are that labor force participation has steadily risen among female employees of all marital statuses and of consecutive cohorts. The rise in women participation has been accompanied by a strong decline in women’s weekly hours worked. This decline has been the most severe among married women with young children. Unlike in many other industrialized countries where married women with very young children have drastically increased their weekly hours since WWII, this group of female employees in Germany has steadily and significantly reduced its weekly hours’ involvement since 1975. The paper attributes much of this decline to institutional change in the federal legislation governing parental leave which have occurred since the mid 1980s. JEL Classification: J13, J22.