Räsänen, Empirical studies on family economics

Even though fathers have participated in childcare more and more in the 2000s, mothers still use the majority of parental leaves in Finland. Non-employment during childcare leave explains a large portion of earnings differences between mothers and fathers after childbirth. In addition, available childcare subsidies steer families' childcare choices and may shorten or lengthen childcare leaves. This study shows that childcare subsidies affect families' choices between home care and public or private early childhood education and care. Furthermore, the choices may affect the career development of mothers. Different mechanisms explain mothers' reduced earnings after childbirth, the so-called child penalty. First of all, non-employment during childcare leave explains the largest share. Additionally, childcare leaves that are longer than average result in larger child penalties. Secondly, employed women work fewer hours, more part-time, and less overtime when their children are small.