Family Policy and Maternal Employment in the Czech Transition: A Natural Experiment

Czech work-life conciliation policies have gone through dramatic changes since the 1989 transition to market economy. We focus on the 1995 Czech Parental Benefit reform which extended the payment of parental benefit to 4 years instead of 3 without an equivalent extension of the job protected parental leave, leaving to mothers the choice of either guaranteed return to employment or additional twelve months of benefits. We rely on a difference-in-differences strategy to assess the net effect of this reform on mother’s labour market participation. We find a strong negative impact on mothers’ probability of return to work at the end of the parental leave, with heterogeneous size with respect to educational attainment. We also find evidence of the persistence of the detrimental effect on mothers’ employment beyond the short-term horizon targeted by the legislator.