We study the labor supply effects of a change in child-subsidy policy designed to both increase fertility and shorten birth-related employment interruptions. The reform yields most of the intended effects.

We apply German Mikrozensus data for the period 1996 to 2004 to investigate the employment status of mothers. Specifically, we ask whether there are behavioral differences between mothers in East and West Germany, whether these differences disappear over time, and whether there are differences...