Child Benefit Reform and Labor Market Participation

This paper examines the impact of a change in the German child benefit system in 1996, which led to a large increase in lump sumtransfers to familieswith children.We analyze the impact on the labor force participation of women. Comparing behavioral changes of women with children with behavioral changes of women without children, we find thatmothers with a working partner and children above age six considerably reduced the number of working hours (conditional on participation). Participation rates however did not decrease.