Brownbag Seminars: Employment on Parental Leave: Evidence from a Financial Incentive to Return to Work in Hungary

Abstract: In this paper we analyze the impact of direct financial incentive on mothers' employment up to three years following childbirth. Starting from 2014 mothers of children aged 1-2 are allowed to work and receive the parental leave benefit at the same time in Hungary. As a result they can get the equivalent of a 62.5% wage subsidy on average for at most one year. We find a moderate increase in employment of the targeted group of mothers that seems to be driven by private sector contracts and full-time employment. Evidence on wage changes is mixed.