We applyGermanMikrozensus data for the period 1996 to 2004 to investigate the employment status of mothers … substantial differences in the employment behavior of East andWest German mothers. German family policy sets incentives … particularly for low income mothers not to return to the labor market after birth. East German mothers’ employment outcomes matches …

neutralized, for example, by imposing a constant wedge, the employment impact will depend on the nature of the unemployment …In order to alleviate unemployment it is often recommended to reduce social security contributions (SSC) and to … compensate for the ensuing loss in revenues by a rise in the value-added tax (VAT). Assuming unemployment to be caused by …