Effect of Cash-Benefit Reform on Immigrants’ Labour Supply and Earnings

This paper evaluates the impact of a recent Norwegian family-policy reform on the labour supply of native and three groups of immigrant women in Norway. The reform provides cash benefits to families with one- to three-year-old children, who do not utilize state-subsidized day-care centres. We find that natives and non-Western immigrants quit the labour market. However, the effect is trivial for natives whereas it is more significant for immigrants. Given participation, earnings of natives and all groups of female immigrants fell after the cash-benefit reform. Specifically, earnings of non-Western immigrants fell by more than those of natives and OECD immigrants.