Does a mother's early return to work improve her future employment status?: A quasi-experiment using Japanese data

Japanese Prime Minister Shinzo Abe has proposed an extension of childcare leave from 1.5 years to 3 years (Nikkei 18 April 2013). His intention is to encourage mothers to stay in the labor force after childbirth and childcare and to reduce the number of children on the waiting list for admission to child care facilities. As the proposed policy intends, the longer childcare leave may encourage women to return to work as their fulltime position is secured. However, some people argue that the policy may in fact have opposite effects. They criticize that a longer childcare leave deprives mothers of their job skills and career accumulation as the longer they are out of the labor force, the more likely their skills depreciate. By using the Longitudinal Survey of Newborns in the 21st Century, this paper examines whether a mother returning to work within 1 year after childbirth has any impacts on being employed and being in fulltime employment. We estimate bivariate probit models with July birth as an instrument. Our method is a quasi-experiment using birth month of newborn babies as an instrumental variable. Our approach is noble in that we direct the attention to the relationship between birth month of a new born baby, the deadline for admission in a licensed child care facility and mother’s early return to work. The data we use are panel data of Japanese newborns and parents, which contains the information on newborns’ birth month. The birth month of the baby is crucial for mother’s return to work due to the application deadline for childcare facilities. Our empirical evidence finds that early return to work has positive causal effect on the likelihood of mother’s fulltime employment in both the short term and long term. However, the positive causal effect of early return to work on being employed is shown only in the short term.