Stefan Ambec

Victoria Barham

Brian Copeland

Restricted Access with Two Variable Factors: On the Redistributive Effects of a Property Regime Change

Keywords: Property Rights, Natural Resources, Mobile Capital, Factor Payments, Income Distribution, Dual Approach. JEL classification: D02, D23, D33, K11, Q2, N5, O13 Droits de propriété, ressources naturelles, mobilité du capital, revenus des facteurs, distribution du revenu, approche duale

Open Access vs

Introduction

A central result in the literature on property right economics holds that in a general equilibrium setting, the privatization of the natural resource sector, though efficient, will lead to lower labor wages. This result is attributed to [START_REF] Weitzman | Free access vs private ownership as alternative systems for managing common property[END_REF] and [START_REF] Samuelson | Is the rent-collector worthy of his full hire?[END_REF], who more generally show that restricting access in the use of a fixed factor (e.g. natural resources or agricultural land) makes the variable factor (e.g. labor) worse off as compared to a situation of open access to the fixed factor. In this paper, we reconsider the general-equilibrium redistributive effects of a property regime change from open access to restricted access in the resource sector. We show in particular that with the addition of a second variable factor (e.g. physical capital), labor may gain from resource privatization.

To see why, imagine an economy with two sectors: manufacturing and (natural) resource. The resource sector is initially exploited under open access. 1 While restricting access in the resource sector may drive out labor, it will also drive out capital. As both factors move into the manufacturing sector in (generally) unequal proportions, factor intensities are affected and consequently, factor returns change in opposite directions. Our principal result states that labor gains from resource privatization if, and only if, the manufacturing sector is labor intensive relative to the resource sector under open access.

The problem is reminiscent of the difference between the specific-factor and the Heckscher-Ohlin models of trade. 2 The specific-factor model assumes that only labor can move between sectors while capital is riveted to its sector; as such, its implications are viewed as delivering the short-run, factor-income effects of trade. Given that the analyses by Weitzman and Samuelson are based on the same assumption, one may similarly view their results as the short-run effects of a property regime change. The Heckscher-Ohlin model takes a longer term view by assuming that both labor and capital can freely move between sectors. By analogy, our results may be viewed as the long-run, factor income effects of a property regime change.

This paper includes further contributions. One consists in the use of a dual approach to equilibrium in the production sector used to analyze a property regime change; to our knowledge, this had not been done before. Another is the derivation of the conditions used to characterize an open access equilibrium in the presence of multiple mobile factors of production. We also show that even though resource privatization leads to a drop in the price of one factor and an increase in the price of the other, the net effect is such that the resource is exploited less intensively under restricted access through a reduced use of both factors.

The Weitzman-Samuelson proposition sparked a literature which extended the model's basic assumptions into various applications. [START_REF] Anderson | Privatizing the commons: An improvement?[END_REF] argue that privatization may not be more efficient if it leads to competing claims to ownership that uses up real resources. [START_REF] Brooks | Rent-seeking and the privatization of the commons[END_REF] show that labor wages may increase following privatization if extra labor is required to enforce private property. Brito, Intriligator and Sheshinski (1997) consider a heterogeneous labor force and also show that the wage could increase following privatization. [START_REF] Baland | Commons as insurance and the welfare impact of privatization[END_REF] argue that open access to a resource may act as an insurance mechanism and thus be ex-ante Pareto superior to private ownership. [START_REF] Ambec | On the redistributive impact of privatizing a resource under imperfect enforcement[END_REF] show that when workers have heterogeneous productivities, private property may benefit the less productive when enforcement is imperfect. While all of these papers provide interesting qualifications to the Weitzman-Samuelson proposition, all assume labor to be the only variable factor. Though this may seem a fair assumption to make for the short run, a long run view should include capital as a second variable factor.

To our knowledge, de Meza and Gould (1987) is the only paper that mentions the potentially important role of a second variable factor; they did not, however, provide a general-equilibrium analysis. We propose a model which uncovers the precise mechanisms at work and provides necessary and sufficient conditions under which wages increase following privatization.

This paper was also inspired by [START_REF] Karp | Property rights, mobile capital, and comparative advantage[END_REF], who argues that when considering the interactions between trade openness, property regimes, and natural resource use, one should treat both labor and capital as mobile factors between the resource and manufacturing sectors. This was in response to previous analysis that ignored the role of capital, such as Chichilnisky (1994), [START_REF] Brander | International trade and open access renewable resources: The small open economy case[END_REF] and [START_REF] Hotte | International trade with endogenous enforcement of property rights[END_REF]. But while [START_REF] Karp | Property rights, mobile capital, and comparative advantage[END_REF] analyzes the link between trade openness and the excludability of capital use, we consider the redistributive effects of a change in property regime for a small open economy with perfectly excludable capital throughout.

The paper is organised as follows. In Section 2, the economy is defined with production technologies and resource endowments. Sectoral equilibrium conditions are laid out in Section 3 for the cases of both open access and restricted access. The general equilibrium analysis appears in Section 4. The conclusion discusses some implications for empirical work as well as possible extensions.

The production technologies

The economy is composed of two sectors: a manufacturing sector (M) and a (natural) resource sector (R).

The manufacturing sector

Manufactures are produced using two types of factors, labor x M l and capital x M k , with a constant returns to scale technology. The output y M of the entire manufacturing sector can thus be represented by the following relation:

y M = F M (x M ), (1)
where x M is input vector (x M l , x M k ) and F M is a function which is twice continuously differentiable, strictly quasi-concave, homogeneous of degree one, increasing in both arguments and such that F M (0) = 0.

The resource sector

To simplify, the resource sector is composed of one resource site of size Q. We abstract from stock-flow resource dynamics by assuming that Q is fixed. In order to produce resource goods, three input types are required: labor x R l , capital x R k and a resource site of size Q. The resource production technology exhibits constant returns to scale in the three-input vector (x R l , x R k , Q). However, since Q is fixed by nature, then production in the resource sector really exhibits decreasing returns to scale with respect to variable input vector x R ≡ (x R l , x R k ). Since the size of input Q is fixed throughout, it is dropped from the notation so that the resource output is simply represented as a function of the two variable inputs.

The resource production function is assumed homothetic with respect to x R , i.e. y R = f (F R (x R )), with function f assumed twice continuously differentiable, increasing, strictly concave and such that f (0) = 0, and function F R is assumed twice continuously differentiable, strictly quasi-concave, homogeneous of degree one, increasing in both arguments and such that F R (0) = 0. The effective effort exerted at exploiting the resource is therefore defined as z = F R (x R ). To summarize, we have:

y R = f (z), [resource output] (2)
z = F R (x R ). [resource exploitation effort] (3)
The economy's total endowments in the mobile factors are denoted xi , i ∈ {l, k}. The following input market clearing conditions must therefore be respected:

x M i + x R i = xi , i ∈ {l, k}. (4)

Equilibrium conditions

As mentioned in the previous section, there are three input types in this economy: labor, capital, and a resource site. The first two, labor and capital, are perfectly excludable at no cost. In the case of the resource site, we shall consider two polar cases of property regimes, following [START_REF] Weitzman | Free access vs private ownership as alternative systems for managing common property[END_REF] and [START_REF] Samuelson | Is the rent-collector worthy of his full hire?[END_REF]:

Restricted access (RA) Exclusion is performed by the owner(s) of the resource site, perfectly and costlessly.

Open access (OA) The resource site can be accessed by anyone without any restriction whatsoever.

Note that in the case of the RA equilibrium, it is irrelevant to determine who owns the site; all that matters is that owners seek to maximize rents by hiring the right combination of variable inputs, and exclude others. Exclusion can just as well be performed by one firm or by a local community as common property owners.

We take manufactures as the numéraire good. w i denotes the respective factor prices. p is the price of the resource good. As a simplification, we consider only the case of a small open economy in which p is fixed on world markets. In the case of the endogenous factor prices, we assume price taking behavior by producers throughout and consider only interior solutions in which both sectors are simultaneously active.

Manufacturing sector

In order to maximize profits, manufacturers simply equate marginal product values with factor prices, i.e.,3

F M i (x M ) = w i , i ∈ {l, k}. (5)
In order to represent the equilibrium in the manufacturing sector, it will also be convenient to make use of the cost-minimization dual to [START_REF] Brito | Privatization and the distribution of income in the commons[END_REF]. Given constant-returns to scale, the unit cost of producing one unit of manufacturing output depends on factor prices only and is denoted c M (w); this function has the usual properties of a cost function. Since manufactured goods are used as numéraire goods, the equilibrium in the manufacturing sector is represented by the following zero-profit condition:

c M (w) = 1. ( 6
)

Resource sector

Equilibrium conditions in the resource sector depend on which property regime prevails.

Restricted access

Under RA, the resource owner gets to choose variable input vector (x R l , x R k ) by hiring labor and capital in order to maximize profits. The problem of the firm is max

x R π = pf (z) -x R w ′ , (7)
where z = F R (x R ) and w ′ is the transpose of input price vector w ≡ (w l , w k ). This yields the following pair of first-order conditions:

pf ′ (z)F R i (x R ) = w i , i ∈ {k, l}. (8)
This condition simply states that under exclusive access, the owner equates the marginal product value of each variable factor to its cost.

When comparing property regimes, it will be useful to look at the problem from the perspective of cost minimization. As a profit maximizer, the owner seeks to minimize the cost of any realized exploitation effort level z. Now given that z = F R (x R ), that F R exhibits constant returns to scale, and price taking, the unit cost of z is considered constant by the resource owner and dependent on input vector cost (w l , w k ). As a result, letting c R (w) denote the unit cost of z, the problem of the owner can also be expressed as follows:

max z π = pf (z) -zc R (w). ( 9
)
The optimal exploitation effort is thus given by

pf ′ (z) = c R (w). ( 10
)
Conditions ( 8) and ( 10) are equivalent ways to represent the RA exploitation level on a resource site.

Open access

In the spirit of [START_REF] Gordon | The economic theory of a common-property resource: The fishery[END_REF], open access leads to a complete dissipation of rents on a resource site. Looking at this from the perspective of the choice of effective effort level z with unit cost c R (w), the open-access analog to condition [START_REF] Gordon | The economic theory of a common-property resource: The fishery[END_REF] is the following:

4 pφ(z) = c R (w), (11)
where φ(z) ≡ f (z)/z denotes the average product of effective effort. In order to arrive at the main result of this paper, however, we make use of the following proposition, which represents the open-access analog to condition (8):

Proposition 1 In the presence of two variable inputs, open access is characterized by the following equilibrium conditions, which correspond to rent dissipation:

pφ(z)F R i (x R ) = w i , i ∈ {k, l}. (12)
Proof: Let x i (w) denote the conditional demand for factor i required to exert one unit of effective effort z. Rent dissipation and cost minimization respec-

tively require: c R (w) = w k x k (w) + w l x l (w) and F R k /F R l = w k /w l . Moreover, since F R (x R ) is homogeneous of degree 1, we have F R (x R ) = x k F R k + x l F R l .
With a bit of simple algebra, substitution of the last two equalities into the previous expression for c R (w) yields c R (w) = w i /F R i for i ∈ {k, l}. Substitute then into condition [START_REF] Hotte | International trade with endogenous enforcement of property rights[END_REF] to obtain expression [START_REF] Jones | A three factor model in theory, trade and history[END_REF]. Q.E.D.

Note that conditions [START_REF] Jones | A three factor model in theory, trade and history[END_REF] subsume two properties of the OA equilibrium: one is a cost minimizing factor combination to achieve effort level z (this is also present in ( 8)); another is rent dissipation (this differs from ( 8)). Taking the case of capital to illustrate, condition [START_REF] Jones | A three factor model in theory, trade and history[END_REF] can be interpreted as follows. Adding one more unit of capital will increase the effective effort by F k . This increase is then multiplied by the average product of effective effort in order to arrive at the extra output received by one user; this increase exceeds the overall increase because it ignores the cost imposed on other users in terms of reduced average product of effective effort 5 . The only cost that each user accounts for is the direct cost of capital w k . This contrasts with RA condition [START_REF] Chichilnisky | North-south trade and the global environment[END_REF], where multiplication with the marginal product of effective effort indicates that the drop in average product of all users is well accounted for.

Under RA, the economy's general equilibrium is characterized by the following set of nine equations: (1), ( 2), (3), (4), ( 5) and [START_REF] Chichilnisky | North-south trade and the global environment[END_REF]. It contains nine endogenous variables: w, x M , x R , z, y M and y R . In the next section, we will use "circumflex" superscript ˆto denote the equilibrium values of variables under exclusive access.

The general equilibrium under OA is characterized by the following set of nine equations: (1), ( 2), (3), ( 4), ( 5) and [START_REF] Jones | A three factor model in theory, trade and history[END_REF]. Compared to RA, only condition [START_REF] Chichilnisky | North-south trade and the global environment[END_REF] has been replaced by [START_REF] Jones | A three factor model in theory, trade and history[END_REF]. We will use "tilde" superscript ˜to denote the equilibrium values of variables under OA.

Results

Our main result is presented in Section 4.1 in the form of Theorem 1. For expository purposes, in order to demonstrate Theorem 1 in Section 4.1, we impose a priori that the resource sector's effective effort level under RA is lower than under OA, i.e., ẑ < z. The demonstration that this inequality must hold is presented in Section 4.2.

Factor payment effects

Let us define factor intensity as follows:

Definition Let ξ i (x S ) ≡ x S i /x S j , i, j ∈ {l, k}, i = j, denote factor i's intensity of use in sector S, S ∈ {M, R}.

Theorem 1 ŵi ≥ wi ⇔ ξ i (x M ) ≥ ξ i (x R ).
Theorem 1 states that restricting access will benefit (harm) the factor that is used more (less) intensively in the manufacturing sector relative to the resource sector under open access. In order to demonstrate this theorem, let us introduce some lemmas.

Lemma 1 states that both sector's factor intensities vary in the same direction when access is restricted.

Lemma 1 ξ i (x M ) ≤ ξ i (x M ) ⇔ ξ i (x R ) ≤ ξ i (x R ).
Proof: Regardless of the prevailing property regime, cost minimization in the production of manufactures and resource exploitation effort requires the following condition to hold:

F M i F M j = w i w j = F R i F R j .
Now marginal products F M i and F M j are respectively decreasing and increasing in factor i's intensity. Hence if the factor price ratio w i /w j decreases (increases), factor i's intensity must be increasing (decreasing) in both sectors. Q.E.D.

Lemma 1 can be illustrated with the help of Figure 1. Here, O R and O M denote the origins for the resource and manufacturing sectors respectively, and xi and xj are the economy's total factor endowments. One notes that the manufacturing sector is relatively factor-i (factor-j) intensive for all factor allocations above (below) the diagonal line O R O M . Lemma 1 therefore implies that if the manufacturing sector is relatively factor-i (factor-j) intensive under OA, as with the point labeled x (x ′ ), then the RA equilibrium must fall in either of areas A or B (A ′ or B ′ ). One consequence is that the sectors retain their relative factor intensities after the regime change. Hence the following corollary: The following lemma states that when RA is consistent with a drop in resource use efforts as compared to OA, then RA leads to a decreased use of both factors in the resource sector. (Note that Lemma 2 does not demonstrate that effective input efforts in the resource sector decrease under RA. This demonstration is relegated to Section 4.

6 ? - - 6 ? O R O M xi xj x M i x M j x R i x R j x x′ A A ′ B B ′ x x′
> xM l . ii) ⇐ is obvious. Q.E.D.
The following lemma states that if, under OA, the manufacturing sector uses factor i more intensively than the resource sector, then the intensity of use of factor i must be lower under RA, and conversely.

Lemma 3 If ẑ < z then ξ i (x M ) ≥ ξ i (x R ) ⇔ ξ i (x M ) ≥ ξ i (x M ).
Proof: i) ⇒ According to Lemma 1, given that ξ i (x M ) ≥ ξ i (x R ), as depicted by point x in Figure 1, the new equilibrium with RA must fall strictly within either of areas A or B. Lemma 2, however, rules out area B as a possibility when ẑ < z. As a result, the RA equilibrium is such that

ξ i (x M ) ≥ ξ i (x M ).
ii) ⇐ a) Begin with the strict inequality ξ i (x M ) > ξ i (x M ). According to Lemma 1, we also have ξ i (x R ) > ξ i (x R ). It is straightforward to verify then that when ξ i (x M ) < ξ i (x R ), the preceding two inequalities imply ẑ > z, which we ruled out.

b) In the case of a strict equality 5), ( 8) and [START_REF] Jones | A three factor model in theory, trade and history[END_REF] this implies that pf ′ (ẑ) = pφ(z) and thus ẑ < z. Suppose now that ξ i (x M ) < ξ i (x R ). It is straightforward to verify then that equal factor intensities under both regimes requires that xR = xM and thus ẑ = z. A contradiction. Q.E.D.

ξ i (x M ) = ξ i (x M ), Lemma 1 implies ξ i (x R ) = ξ i (x R ). Therefore F M i (x M ) = F M i (x M ) and F R i (x R ) = F R i (x R ). From (
Since a decrease in factor-i intensity can only come about with a decrease in the relative cost of factor i, we have the following corollary, which we state without proof:

Corollary 2 If ẑ < z then ξ i (x M ) ≥ ξ i (x R ) ⇔ ŵi / ŵj ≥ wi / wj .
The next lemma states that an increase in the use of factor i's intensity in the manufacturing sector is associated with a lower return to that factor in equilibrium.

Lemma 4 ξ i (x M ) ≤ ξ i (x M ) ⇔ wi ≥ ŵi . Proof: Observe that ŵi = F M i (x M ) and wi = F M i (x M ). Therefore wi ≥ ŵi is equivalent to F M i (x M ) ≥ F M i (x M ). Because marginal product F M i is decreasing in factor i's intensity, this is also equivalent to ξ M i (x M ) ≤ ξ M i (x M ).Q.E.D.
We can now prove Theorem 1.

Proof: From Lemma 3, we have

ξ i (x M ) ≥ ξ i (x R ) ⇔ ξ i (x M ) ≥ ξ i (x M
). From Lemma 4, the latter inequality is equivalent to ŵi ≥ wi . Q.E.D.

In order to illustrate the implication of this theorem, suppose that initially, access to the resource sector is open to all and that given the technologies, output prices and factor endowments, the equilibrium factor prices are such that the manufacturing sector uses labor more intensively than the resource sector. Then, as the introduction of a restricted access regime leads to a drop in the aggregate exploitation efforts in the resource sector, the reallocation of factors will lead both sectors to use capital more intensively than before and as a result, the wage rate will increase. It remains to be shown that the exploitation effort level is lower under RA than OA.

Effective input efforts in the resource sector

Recall that in order to derive Theorem 1, we have posited that the RA regime's effective effort level in the resource sector would be lower than under OA. This may appear like an obvious consequence of access restriction. However, given that one factor cost is lower under RA than OA, we cannot a priori rule out the possibility that the net effect will be such that the unit cost of input efforts c R (w) drops to level low enough under RA that the resource exploitation level is higher than under OA. In this section, we show that the unit cost of effective effort in the resource sector is indeed lower under RA than OA, but that it is still the case that ẑ < z.

We begin with the following proposition, which states that the unit cost of effort in the resource sector is (weakly) lower under RA than OA.

Lemma 5 c R ( ŵ) ≤ c R ( w).
Before demonstrating Lemma 5, let us introduce two figures. Figure 2 represents the resource sector only and identifies the OA equilibrium at the intersection between the unit effort cost c R ( w) and its average product value pφ(z), as per [START_REF] Hotte | International trade with endogenous enforcement of property rights[END_REF]. Keep in mind, however, that unit effort cost c R ( w) is endogenous since the factor cost vector w is determined along with the manufacturing sector equilibrium conditions and factor clearing.

Making use of the dual approach, equilibrium factor costs can however be illustrated on a graph with the use of isocost curves c M (w) = 1 and c R (w) = pφ(z), as in Figure 3. Indeed, at intersection point w, both sector's equilibrium conditions ( 6) and ( 11) are respected and the corresponding factor price vector is the equilibrium one. Note that vectors ãM and ãR , respectively normal to isocost curves c M (w) = 1 and c R (w) = pφ(z), represent the input vectors per unit of manufactured output and resource effort respectively. 6 Consequently, assuming that the isocost curve of the manufacturing sector crosses that of the resource sector from below, we have that the manufacturing sector is relatively factor-i intensive at OA equilibrium point w, which corresponds to a point above the diagonal line in Figure 1, such as x. (The converse holds if the isocost curve of the manufacturing sector crosses from above.) Note that we consider throughout that production is diversified under both property regimes; this requires that the economy's total factor endowment x vector falls within the diversification cone formed by the area between vectors ãM and ãR and with origin at point w. 7Proof: Lemma 5 is formally demonstrated in Appendix A. The following provides a graphical representation. Assume instead that c R ( ŵ) > c R ( w). Then according to [START_REF] Hotte | International trade with endogenous enforcement of property rights[END_REF] and [START_REF] Gordon | The economic theory of a common-property resource: The fishery[END_REF], we have pf ′ (ẑ) > pφ(z) and thus ẑ < z < z, where z is defined as f ′ (z) = φ(z) (see Figure 2). If the manufacturing sector is relatively factor-i intensive in the OA equilibrium, curve c M (w) = 1 intersects curve c R (w) = pφ(z) from below (see Figure 3). Now with c R ( ŵ) > c R ( w), the resource sector's unit effort isocost curve under RA must be above that under OA; this is illustrated by the dotted curve in Figure 3. The new equilibrium at point w ′ is characterized by a drop in the relative price of Lemma 5 implies that the resource sector's RA regime isocost curve lies below that of the OA regime's. Consequently, the RA equilibrium wage vector ŵ must be located above the OA one w along the manufacturing sector's isocost curve, which is consistent with Theorem 1, i.e., in the case where the manufacturing sector is factor-i intensive under OA, factor i (factor j) is more (less) costly under RA than OA. It also implies the following: Lemma 6 ẑ < z.

Proof: A formal proof is provided in Appendix B. Graphically, it can be readily verified from Figure 1 that since the relative cost of factor i increases under RA, a lower intensity of its use in both sectors requires that the RA equilibrium factor allocation must fall into area A, which is characterized by x ≪ x and therefore ẑ < z. Q.E.D.

A natural question to ask at this point is what determines the intensity of factor use. The following section provides a clue to this question in terms of production technologies. The manufacturing output elasticity with respect to input i is defined as follows:

ǫ M i (x M ) = F M i (x M )x M i F M (x M ) , i ∈ {k, l}. (13)
The output elasticity gives the percentage response of manufacturing output to a one percent increase in input i.

In the resource sector, we define the exploitation effort elasticity with respect to input i as follows:

ǫ R i (x R ) = F R i (x R )x R i F R (x R ) , i ∈ {l, k}. (14)
Proposition 2 ǫ R i (x R ) ≥ ǫ M i (x M ) ⇔ ξ i (x R ) ≥ ξ i (x M ).
Proof: By definition of the output/effort elasticities to inputs, we have xS i = ǫ S i (x S )F S (x S )/F S i (x S ) for all S ∈ {M, R} and i ∈ {k, l}. Thus

ξ i (x S ) = ǫ S i (x S ) ǫ S j (x S ) F S j (x S ) F S i (x S )
. Now from the equilibrium conditions ( 5) and ( 12), we have,

F M j (x M ) F M i (x M ) = wi wj = F R j (x R ) F R i (x R ) . Therefore ξ i (x R ) ≥ ξ i (x M ), if and only if, ǫ R i (x R ) ǫ R j (x R ) ≥ ǫ M i (x M ) ǫ M j (x R ) . (15)
Using the fact that for linear homogeneous functions F S , the output/effort elasticities to inputs must satisfy ǫ S i (x S ) + ǫ S j (x S ) = 1, S ∈ {M, R}, inequality [START_REF] Mussa | Tariffs and the distribution of income: The importance of factor specificity, substitutability, and intensity in the short and long run[END_REF]

is equivalent to ǫ R i (x R ) ≥ ǫ M i (x M ). Q.E.D.
Proposition 2 implies that under an open access equilibrium, the manufacturing sector is labor intensive relative to the resource sector if, and only if, the elasticity of output to capital in the manufacturing sector is lower than the elasticity of effort to capital in the resource sector. Whether this the case or not in practice will depend on the context. This includes factors such as the type of natural resource and the available technologies.

Conclusion

We have seen that when both labor and capital are mobile between sectors, as one would expect in the long run, the creation of property rights in the resource sector will contribute to raise wages if, and only if, the manufacturing sector uses labor relatively intensively. This result contrasts with previous ones in the literature which suggested that resource privatization would necessarily contribute to lower wages, a result which is now shown to rest on the assumption that labor is the sole mobile factor, usually considered as a short-run view. Our analysis introduced a dual approach to equilibrium in the production sector in order to compare two property regimes.

One may envision extending the analysis with the introduction of transaction costs associated with the creation of property rights. Given that the enforcement of property rights in the natural resource sector are notoriously difficulty to enforce, it may be of interest to explicitly introduce the use of enforcement labor and capital into the analysis. The basic model may also lend itself well to an analysis of the role of labor wages and the returns to capital in explaining the occurrence of conflict in the presence of natural resources.

Another avenue of research would consist in the introduction of a more explicit role for trade by relaxing the small open economy assumption.

A Proof that c R ( ŵ) ≤ c R ( w)
Recall that equilibrium conditions for factor payments must respect condition [START_REF] Brooks | Rent-seeking and the privatization of the commons[END_REF] and either of [START_REF] Hotte | International trade with endogenous enforcement of property rights[END_REF] or [START_REF] Gordon | The economic theory of a common-property resource: The fishery[END_REF]. Let us express those by the following set of two equations, where parameter α is either equal to pφ(z) or pf ′ (ẑ): c M (w i , w j ) -1 = 0, [START_REF] Samuelson | Is the rent-collector worthy of his full hire?[END_REF] c R (w i , w j ) -α = 0.

Differentiating these two expressions with respect to parameter α and making use of Cramer's rule yields:

∂w i ∂α = -c M j c M i c R j -c R i c M j , (18)
∂w j ∂α = c M i c M i c R j -c R i c M j . ( 19
)
Now according to Shephard's lemma, c S i denotes the quantity of factor i used in sector S per unit of output, i.e., y S c S i = x S i , S ∈ {M, R}, and similarly for factor j. Inserting this into the above two equations yields:

∂w i ∂α = -y R x M j x M i x R j -x R i x M j , (20)
∂w j ∂α = y R x M i x M i x R j -x R i x M j . (21)
We consequently have:

∂w i ∂α < 0 iff ξ i (x M ) > ξ i (x R ), ( 22
)
∂w j ∂α > 0 iff ξ i (x M ) > ξ i (x R ). ( 23
)
Without loss of generality, we posit that ξ i (x M ) > ξ i (x R ). 8 The above therefore implies that an increase in α leads to a decrease in w i /w j . Assume now that c R ( ŵ) > c R ( w). This implies that α must take on a larger value under RA than OA and thus, according to the above result, ŵi / ŵj < wi / wj . But c R ( ŵ) > c R ( w) also implies that ẑ < z, as can be readily seen from Figure 2. Now according to Corollary 2, ξ i (x M ) ≥ ξ i (x R ) implies ŵi / ŵj ≥ wi / wj when ẑ < z. A contradiction. Q.E.D.

B Proof that ẑ < z

Assume to the contrary that ẑ ≥ z. Then, it must be the case that c R ( ŵ) < c R ( w). In line with the analysis of Appendix A above, this calls for a lower value of α under RA as compared to OA and therefore ŵi / ŵj > wi / wj . Consequently, factor i is used less intensively under RA than OA and, as can be readily seen in Figure 1, this requires xR ≪ xR and thus ẑ < z. A contradiction. Q.E.D.

Figure 1 :

 1 Figure 1: Property regimes, factor allocations, and factor intensities

Figure 2 :

 2 Figure 2: Resource sector, property regimes, and unit cost of effort

cFigure 3 :

 3 Figure 3: Isocost curves, property regime equilibria, and factor prices

  2.) Lemma 2 ẑ < z ⇔ xR ≪ xR (and equivalently xM ≫ xM ).

	Proof: i) ⇒ Given that ẑ < z, then either xR k < xR k or xR l < xR l ,
	or both. However, if one factor increases while the other decreases in the
	resource sector, market clearing implies that the opposite happens in the
	manufacturing sector, which means that factor intensities move in opposite
	directions, thus violating Lemma 1. Consequently, it must be the case that
	xR k < xR k and xR l < xR l , and as a result of market clearing, we have xM k > xM k
	and xM l

Note that in this text, an open access regime refers to the absence of exclusion or restrictions in the use of natural resources. This contrasts with a restricted access regime, which refers to a situation where some entity enjoys full property rights over a resource in such manner that it can control access perfectly and at no cost. Restricted access therefore includes: private property when the entity is an individual or a firm; common property when it is a local collective; and public property when it is the state.

See Jones (1971),[START_REF] Mayer | Short-run and long-run equilibrium for a small open economy[END_REF] and[START_REF] Mussa | Tariffs and the distribution of income: The importance of factor specificity, substitutability, and intensity in the short and long run[END_REF].

The subscript of a function denotes a partial derivative.

As noted in[START_REF] Cheung | The structure of a contract and the theory of a non-exclusive resource[END_REF], rent dissipation would not be complete under free access with a limited number of users. In this respect, our open access equilibrium approximates a situation with a large number of users.

Note that this assumes the presence of an arbitrarily large number of users[START_REF] Cheung | The structure of a contract and the theory of a non-exclusive resource[END_REF].

This is a consequence of Shephard's lemma which states that ãS = (c S i (w), c S j (w)). See, for instance, chapter 3 of[START_REF] Woodland | International Trade and Resource Allocation[END_REF].

Note also that if the cost functions were to intersect at multiple points, only one is compatible with a specific total factor endowment.

Note that the problem is undefined for ξ i (x M ) = ξ i (x R ).


Alzbeta Mullerova
email: alzbeta.mullerova@u-paris10.fr

Dominique Meurs

Marteen Petra Todd

Female Labour Supply in the Czech Transition: Effects of the Work-Life Conciliation Policies

Keywords: J13, J16, J18, P30 Female Labour Supply, Parental Leave and Benefit, Policy Evaluation

Czech conciliation policies, i.e. social, family and employment policies affecting households' fertility and employment choices, have gone through dramatic changes since the 1989 transition to market economy. After a brief presentation of conciliation policies and practices before and after the transition, we focus on the 1995 Czech Parental Benefit reform and we evaluate its impact on mothers' labour supply. The payment of parental benefits was extended to 4 years instead of 3 without an equivalent extension of the job protected parental leave, leaving to mothers the choice of either guaranteed employment or additional twelve months of benefits. We use difference-in-differences strategy of identification to assess the net effect of this reform on mother's labour market participation. We find a sizeable and negative impact on mothers' probability of return to work at the end of the parental leave.

Introduction

The 1989 transition to market economy transformed the Czech family policy design as well as mothers' labour market participation, which declined steeply during this period. In this paper we examine the effect of a specific reform of the parental leave (PL): on October 1 st 1995, the parental benefit is suddenly extended from 3 to 4 years.

In the economic literature, the theoretical and empirical links between family policy and work-life conciliation have been largely discussed in Western European countries.

However, as far as we know, no empirical family policy evaluation has been conducted in the Czech Republic, and very few in the post-transitional Central and Eastern Europe (Balint and Kollo, 2007;[START_REF] Lockshin | Household Child Care Choices and Women's Work Behavior in Russia[END_REF], despite the sizeable public expenditure that they represent and the labour market outcomes that they put at stake. For both developed and developing countries, the issue of female labour supply is granted growing importance by international institutions (European Commission, 2013;[START_REF] Todd | Effectiveness of interventions aimed at improving women's employability and quality of work: a critical review[END_REF]. In France, [START_REF] Piketty | L'impact de l'allocation parentale d'éducation sur l'activité féminine et la fécondité en France, 1982-2002[END_REF] analyses the impact of a PL reform on mothers' fertility and labour supply, while [START_REF] Moschion | Reconciling Work and Family Life: The Effect of the French Paid Parental Leave[END_REF] analyses the impact on the interaction between fertility and labour supply. [START_REF] Lalive | Does Parental Leave Affect Fertility and Return-to-Work? Evidence from Two Natural Experiments[END_REF] estimate the impact of two Austrian PL reforms on fertility and both shortrun and long-run labour market outcomes. Schonberg and Ludsteck (forthcoming) look into a series of German PL reforms, and also differentiate the impact of two aspects, job protection and parental benefit. Comparative studies [START_REF] Ruhm | The Economic Consequences of Parental Leave Mandates: Lessons from Europe[END_REF] indicate that PL schemes are rather positively correlated to mothers' labour market attachment, and appropriate PL and childcare policies can contribute to supporting both fertility and employment rates (Thévenon, 2013).

Therefore, econometric evidence tends to indicate that PL increases job continuity by providing a guaranteed return-to-work after the end of the PL. However, as the German and Austrian cases point out, one should take into account the different incentives that yield in the job protection aspect and the cash transfer aspect of the PL.

In this paper, we analyse a Czech reform which disjoints these two features, by extending the parental benefit duration by 12 months beyond the job protection period (36 months). The predictable effects on mothers' labour supply are therefore more equivocal, since they are pulled by the cash transfer effect, and not by the job protection effect. The extension of parental benefit increases the replacement rate and decreases incentives to return to work: the explicit goal of the reform is to maintain mothers in their role of inactive caregivers for a longer period, and we assess whether and to what extent the goal is reached in terms of employment probability at the end of the job protected period. This reform was revealed and implemented on October 1 st 1995, as a last minute amendment to the State Social Support Act. This change comes therefore as a surprise, and represents an interesting case of natural experiment. All current and future recipients of parental benefit (i.e. mothers of children aged less than 36 months) at the moment of the reform, become eligible to the extension. They are therefore offered the choice of either returning to their previous employment at the end of the job protected 36 months, or giving up on the job protection and receiving 12 extra months of benefits at the condition of full-time personal care for their 3 year-old child. This reform comes out as part of a re-familizing policy trend, but also as an attempt to ease the pressures on the newly established labour market. The objective of this paper is therefore to assess the impact of this reform on mothers' labour supply and disentangle the context of the reform and its genuine effect, using a difference-in-differences design applied to the Labour Force Survey. The results show that a causal effect exists: the reform lowers mothers' probability of employment at the end of the PL by one fifth.

The paper is organized as follows. Section 2 is dedicated to the institutional background of conciliation policies during the communist era and after the transition to market economy (2.1.), with a focus on the 1995 parental benefit reform (2.2.). Then we proceed to an empirical evaluation of this reform: Section 3 presents the empirical strategy, while Section 4 discusses the data. We report the results in Section 5, and Section 6 concludes.

Background

Work-family conciliation policies and practices before and after the transition

In the Eastern Bloc, the centrally planned economy led to a specific management of the labour force, marked by a strong interventionism. Compulsory employment did not apply to married women, but the social and family benefits were conditioned on employment, and the model of double income was preponderant among Czech households. The female full time employment spread among the majority of women throughout the active age, and yet in 1955 women count for 42% of the Czechoslovak labour force [START_REF] Haskova | At home, in nursery or in kindergarten? Family and institutional care of pre-school children in the Czech society between 1945 and 2006[END_REF]. Massive female employment came along with a fertility decline 2 , which became alarming in the 1960's and marked the beginning of a comprehensive pro-natalist family policy. The total fertility rate recorded a significant drop between 1950 and 1970 (from 2.8 to 1.9), and fell below the replacement level in 1966 (CZSO, 2012). Concerned by this decline, public authorities began to set up a thorough and progressively more and more generous family and social policy. The maternity leave is extended to 26 weeks in 1968, then 28 weeks in 1987. 1 year PL is established in 1964, and then extended to 2 years in 1970 and 3 years in 1989, under the condition of 2 dependent children in the household. The pre-transitional family policy uses two major tools: lengthening the leave for mothers of more than one preschool aged child, and also widening the system of public day care facilities. During the 1960's, the part of children attending kindergartens moves to 56% (compared to 26% in 1950), and the form of institutional childcare moves from part-time care to all-day service for the majority of children, along the objective of defamilization of care and liberation of female labour force (Haskova and Uhde, 2011). Between the 1950' and the 1980', the part of children attending nurseries moves from 3% to 18% and the part of children attending kindergartens moves from 26% to 81% [START_REF] Haskova | At home, in nursery or in kindergarten? Family and institutional care of pre-school children in the Czech society between 1945 and 2006[END_REF].

The change of the political regime came along with a transition to market economy, with two salient features in relation to work-family conciliation. The first one is the creation of a labour market, and the second one is an ideological swift in the management of public expenditures, advocating less interventionist family policy and more market-based solutions to the childcare issue. In the context of economic uncertainty and uprising unemployment, the negative effect of motherhood on labour force participation is reinforced and gets ahead of other European countries3 . This motherhood-related employment gap highlights the shift from a model of joint parenthood and labour, towards an incompatibility of having young children and working simultaneously. Czech women postpone or reject motherhood, which is recorded by an unprecedented drop in fertility rate in the 1990's (1,13 in 1999(1,13 in (CZSO, 2012))). The post-transitional family policy evolves in a pro-reform climate and conveys an "ideologically induced animosity towards the institutions and policies of the welfare state" (Potucek, 2001, p.102). The rejection of former pro-natalist objectives is one illustration of this shift. Fertility is regarded as a matter of individual preferences which should be held out of public authority's reach. The individual responsibility is promoted as counterpart to the former state paternalism [START_REF] Vecernik | Escaping from socialist paternalism: Social policy reform in the Czech Republic[END_REF], and the institution of public childcare loses to a large extent the public attention and financing. The supply of kindergartens decreases in accordance to the fertility trend, but the number of nurseries records an unprecedented decline, which gets far ahead the declining demand: from 1 700 nurseries before the transition, we move to 60 in 2003 [START_REF] Kucharova | Day care for children of pre-school and early-school age[END_REF]. As to the paid PL, it is extended in 1990 to 3 years for all children, with no other condition than the child's age. This generous evolution of PL scheme might appear paradoxical in the context of transition towards less interventionist and less universalist approach of the family policy, but the opportunity to appease labour market pressures and promote social peace gains priority. Therefore, in spite of the liberal discourse4 , the PL scheme follows rather a conservative gender labour division target, than a high labour market participation target. The effects of family policy measures on female labour supply are not a direct concern for the Czech policy maker in the 1990's, yet the extent and the cost of the PL schemes invite us to consider their efficiency and evaluate their effects. We will therefore focus on a major post-transitional PL reform in the remainder of this paper, and we will proceed to an empirical evaluation of its impact on mothers' labour supply.

The Parental Leave legislation in 1995

Between 1990 and 1995, the duration of the PL is 3 years, that is to say 36 months, until the child's 3 rd birthday. The PL, which is synonym of the period of protected employment, is combined with a parental benefit for the same amount of time. The maximum duration of the leave and the benefit is the same for all the children; the extension to 7 years for handicapped children is the only exception. Parents, who are entitled by the social insurance to maternity leave and benefits, enter the PL and start perceiving parental benefits at the end of the maternity leave. Others are directly allocated parental benefits, but this distinction has no effect on the limit of the leave and of the benefit payment, which remains the child's 3 rd birthday. In 1995, only mothers (or widowers) are entitled to maternity leave, fathers are entitled to parental benefit but without the job security provided by the PL.

Therefore, the number of fathers perceiving benefit is negligible. The amount of the parental benefit is flat, 1740Kc for each household. The benefit eligibility is universal, and the only condition for the parent is to provide personal care, which means that the child is not allowed to attend any childcare facility and the parent is not allowed to work more than 2 hours a day or earn more than 1800Kc per month.

In 1995, the bill 117/1995 Coll. remodels the entire system of social benefits, by creating a State Social Support branch as one of the 3 pillars of the social security. The first pillar is the Social Insurance, in charge of maternity benefits among others, the second pillar is the Social Support, in charge of expenditures for families with children, and the third pillar is the Social Assistance in material need. Inside the social support branch, the parental benefit scheme is revised: the payment of parental benefit is extended to 4 years instead of 3, with the amount of the benefit being kept at a similar level, 1848Kc per month. The benefit is established as 1.1 times the minimal subsistence income, therefore meant to be periodically re-evaluated. The specific feature of this reform is that the benefit extension is not accompanied by any extension of the job-protected PL. The job protection, under the jurisdiction of the labour code and therefore independent of the social legislation, maintains the duration of 36 months (i.e. until child's 3 rd birthday). Yet the benefit duration becomes from now on 48 months (i.e. until child's 4 th birthday). Therefore, after the reform, parents at the end of the PL face the choice of either returning to employment, or perceiving 12 extra months of benefit, no longer accompanied by job protection. In case mothers do not have an employment to return to, their choice is the parental benefit during 12 months on the one side, or an unemployment benefit during only 6 months, conditioned on previous employment, on the other side. Compared to 2500Kc of full-time minimum wage and 1848Kc of parental benefit during 12 months, the unemployment benefit is equal to 60% of previous wage during 3 months, then 50% for the 3 months left. The parental benefit extension is therefore relatively generous and incentivizes mothers to postpone their return-to-work at the risk of worse labour market perspectives at the end of the extension. This reform, as part of the Act on State Social Support, comes into effect on October 1 st 1995. It should be noted that the paragraph on the parental benefit duration ( §30) is not initially intended to feature on the bill and therefore is not discussed by the government. It comes as a paragraph added later on by the parliament during the legislative process, at the initiative of the Christian Democrat Union. Therefore, beyond a tool to fight unemployment and to promote social peace, the postponement of mothers' return to employment is also a conservative pro-family response to the pre-1989 defamilizing childcare policy.

Once the act is implemented, the parental benefit scheme is reformed in the following way. The payment is extended until the child's fourth birthday for all the current and future recipients of the benefit at the date of the implementation of the reform. Therefore, the distinction between eligible and non-eligible is based on the date of the child's 3 rd birthday (or in other words his/her birth date, 3 years prior). Should the 3 rd birthday occur before October 1 st 1995, then the mother exhausts her benefit and leave rights before the reform and she is not concerned by the benefit extension. Should the 3 rd birthday occur after October 1 st 1995, then the mother is still a recipient of the benefit at the moment of the reform, and she is concerned by the extension. The population of mothers, who are eligible but close to the limit, is obviously the most interesting to analyse. For them, the extension comes as a surprise5 , and they cannot be suspected of adapting their fertility strategies (number of children, date of birth) to the eligibility criterion. We are therefore particularly interested in the return-to-work patterns of those mothers who experienced the end of their PL shortly after the implementation of the reform. We will develop this analysis in the remainder of this paper.

3 Data and summary statistics

Data

We use the Czech Labour Force Survey (LFS), collected by the Czech Statistical Office on a quarterly basis starting from December 1992. Each quarter records approximately 70 000 individuals, and collects rich information about the socio-economic profile of each member of a household. The survey is representative of the Czech population via an individual weighting system. The LFS is a rotating panel, where each household remains in the sample for 5 consecutive quarters. The data are collected on a declarative basis, and provide a large battery of variables related to one's status in the labour market in the current quarter (more specifically in the reference week). We use 6 then 12 quarters around the reform for the estimation's sake (1995)(1996)(1997)(1998), and we exploit the panel structure for the construction of our sample: we shortlist mothers who were present in the survey around the moment when their child reached 36 months, i.e. before and after the child's 3 rd birthday. The data have not been collected with the aim of analysing work-life conciliation, as they are focused primarily on employment, but they are rich enough to be exploited from this angle, and most importantly, no other data with comparable extent have existed in the posttransitional context of the 1990's. Among the major drawbacks of the data, the panel rotation does not allow us to go beyond the short-run effects of the reform. Regular panel data would have allowed us to turn towards mothers' economic status history and have proper knowledge of its evolution during and after the PL at an individual level. Another limitation comes from the fact that the LFS records no information about income. Yet it would have been convenient to take into account wages and benefits, and most of all, it would have been interesting to assess the effects of incitation to longer withdrawal from the labour market on mothers' earnings.

As to the sample construction, mothers are identified in an indirect way in the LFS.

We select women who are between 15 and 39 years of age. The upper bound is high enough, as we are only interested in mothers whose child is not older than 3, and it allows us to minimize the risk of confusion between mothers and grand-mothers in the household. The age of the child is given, unlike the date of birth. Therefore we isolate mothers at the end of the PL duration (36 months) by the child's transition from the age of 2 to the age of 3 between two succeeding quarters. We identify the quarter in which the child becomes aged 3 compared to the previous record where he is aged 2, and we keep only mothers for whom we have these two successive records available in the data. That is how we construct a "transition" variable, which signals that the child passed from 2 to 3 years of age -and so the mother just quit the PL. Therefore, the construction of the sample is restrictive and we lose many individuals.

Inside the considered period, we lose mothers who enter the survey after the transition/who quit the survey before the transition; at both bounds of the considered period we lose those who experience the transition before or after the quarters we use for the estimation. Despite the restrictions, the large size of the dataset allows us to constitute a sample of 1703 mothers, representative of 198 000 individuals on a national scale.

As to the choice of quarters, we centre the analysis on 3 quarters before and 3 quarters after the reform6 . However, since we don't have any indication on the actual date of birth, we have to adapt the choice of quarters to our transition variable. As for the very first quarter after the reform (last quarter 1995), if the variable indicates that the child has reached 36 months since the previous record (3 rd quarter 1995), we cannot identify the date of birth precisely enough to determine if the transition occurred before or after October 1 st 1995.

According to the interview week of the given household, the transition from 2 to 3 may have occurred before October 1 st 1995 (non-eligible) or after October 1 st 1995 (eligible). We cannot stipulate clearly that all the mothers in this wave of the survey are eligible to the extra 12 months of benefits, and that is why the 4 th quarter of 1995 is excluded from the estimation. We will therefore compare mothers who experienced the transition between January 1 st 1995 and September 30 th 1995 (non-eligible) to those who experienced the transition between January 1 st 1996 and September 30 th 1996 (eligible); in other words, our sample comprises the quarters 1, 2 and 3 in 1995 and the quarters 1,2 and 3 in 1996.

Summary statistics

Before focusing on mothers, we compare basic summary statistics for the overall female population within the same age group (15-39). In 1995, the overall female population aged 15 to 39 in our data comprises 11 725 individuals. They are on average 26,2 years old 7 , and a half of them is married. As to their educational level, one third graduated high school and 6,3% have superior education. Among these women, 63,7% have children. As to the economic activity self-classification, which is our dependent variable, 54,6% are employed, while 16% are on ML or PL and 19,3% are students. 4,3% of them declare being unemployed.

Mothers are on average older than the overall population (29,6), and the proportion of married mothers goes up to 82,5%. As to the number of children, 46,4% have 1 child, 44,4% have 2 children, and 9 % have 3 children or more. They are slightly more educated than the overall population (by 3 percentage points for high school graduation and by 2 points for superior education), which may be partly linked to their higher average age. As to the labour market activity, the proportion of employed is similar to the overall population in 1995, while the share of students moves down to 4% and the share of ML and PL moves up to 26%. These are the characteristics of all the mothers, independently of the age of the child.

We then extract our sample of eligible and control individuals, that is to say mothers whose child turned 3 within 3 quarters before (non-eligible) or after (eligible) October 1 st 1995. For the second estimation method, we compare this cohort around the reform date (1995)(1996) to a cohort around a date when no reform occurred (1997)(1998). The eligible and control samples feature similar characteristics, the statistics are provided in Table B.1 in Appendix. The reform and non-reform cohort are also similar with respect to explanatory variables, the statistics are provided in Table B.2 in Appendix.

As to the labour market participation of our sample, the share of employed mothers records a substantial decrease over the period of interest. Mothers are less and less likely to be employed at the end of the PL, and we will assess the causal relation between this decline and the reform implementation in the remainder of the paper. 7 The statistics are corrected by individual weights in order to ensure representativeness.

Empirical Strategy

As mentioned above, we proceed to two estimation methods: the preliminary before/after comparison and the conclusive difference-in-differences estimation. We want to account for mothers' return-to-work patterns after the 36 months of parental leave, and our testable hypothesis is that the 1995 parental benefit reform works as a disincentive to returnto-work, by increasing the value of staying at home. Therefore, the predictable effect of the reform is to lower the share of mothers who are employed once the parental leave is over. In the medium run, this extension of labour market withdrawal might weaken labour market attachment and reinforce career discontinuities, especially as it goes with the loss of the job protection. Previous evidence shows that parental leave schemes mostly increase postmaternity employment in the medium run [START_REF] Ruhm | The Economic Consequences of Parental Leave Mandates: Lessons from Europe[END_REF] or at least do not decrease it [START_REF] Lalive | Does Parental Leave Affect Fertility and Return-to-Work? Evidence from Two Natural Experiments[END_REF], but this is due to the job protection side and less to the cash transfer side of the story. The specific feature of our reform is to disjoint the duration of the job protection and the duration of the benefit, in favour of the latter. Schonberg and Ludsteck (forthcoming) and [START_REF] Lalive | Does Parental Leave Affect Fertility and Return-to-Work? Evidence from Two Natural Experiments[END_REF] analyse a series of PL scheme reforms in Germany and Austria, claiming that the case when benefits are longer than job protection worsens mothers' post-maternity labour market situation.

We use a method similar to theirs in our evaluation of the impact of the reform: a difference-in-differences design applied to the short-run return-to-work probability. What are the testable hypotheses of the reform's impact on mothers' return to work? The extension of the flat rate benefit takes place at the expense of the guaranteed return to work: we can therefore expect a heterogeneous effect on mothers according to their labour market attachment and labour income. Besides, at the moment of the implementation of the reform, the economic situation is degrading and unemployment is rising. The extension of the benefit can therefore be used as a tool to delay return to activity for mothers with low labour market perspectives. Yet the unemployment threat may also act as an incentive to attach more importance to the job protection and opt for the return to guaranteed employment instead of 12 extra months of benefits. In order to test these predictions, we estimate the causal effect of the reform on mothers' employment probability after the end of their job protected PL. In other words, we identify the impact of the extension of the payment of benefits from 36 to 48 months, on mothers' employment probability after the 36 th month. Our outcome of interest is the employment status at the end of the parental leave, i.e. as soon as the child turns 3. For this purpose, we consider mothers' economic activity status directly at the quarter following the transition of the child's age from 2 to 3. This employment status variable is self-reported, and alternative answers include ML, PL, unemployment or staying at home for child care purposes. At this moment, the parental leave rights expired less than 3 months ago, and the potential difference in labour supply between eligible and non-eligible can be observed. The following table sums up the mechanism of the 1995 reform for a clear understanding of the evaluation to come.

PL over, 12 extra months of benefit

In the preliminary step, we estimate a simple before/after model, where mothers from the 1 st row of the table above serve as control (they quit the parental benefit system between January and September 1995, they are non-eligible but close to the limit), and mothers from the 2 nd row of the table serve as treated (the transition from 2 to 3 years is recorded between January and September 1996, they are entitled to 12 extra months of benefits but close to the limit). In other words, we compare employment probability of mothers whose child reached 36 months before October 1 st 1995 to that of mothers whose child reached 36 months after October 1 st 1995. We estimate a linear probability model, where we correct for heteroskedasticity. However, this approach is insufficient to reveal casual relation between the reform and the outcome of interest, because the observed difference can be affected by maturation bias: we don't control for the fact that Czech mothers may simply lower their labour supply from one year to another due to the business cycle or other economic and social factors. Moreover, seasonality may affect the outcome. As we cannot grant the temporal stability of mothers' employment rates over the considered period, we pursue with a different method, applying a double comparison.

We use the difference-in-differences design, by comparing the evolution of employment rate within a cohort around the reform date, with the evolution of employment rate within a different cohort, around a date when no reform occurred. We assume that mothers have fairly similar characteristics around these 2 dates 8 . We consider such covariates as the marital status, the age, the education and the number of children 9 . This double comparison captures possible seasonality, and most importantly, possible trend in the outcome. This trend would be independent of the reform and due for instance to economic situation. This is a very plausible pitfall of the causal analysis here, as the reform aims at withdrawing mothers from employment in the context of rising unemployment and therefore raises the issue of endogeneity. The difference-in-differences design allows for the existence of such a trend: it accounts for the deterioration of the labour market situation from one year to the next, while isolating the causal effect of the reform by contrast with the change occurred around the non-reform date. Here, we select October 1 st 1997 as the non-reform date, and therefore we compare the change occurred after the reform implementation with the same date 2 years after. As we use 3 quarters before and after the reform in the regression, we had to settle for this 2 year distance between the reform date and the non-reform date, for the two cohorts not to overlap.

8 See the Table 3 with summary statistics of the sample, in Appendix. 9 As to the number of children, one must take into account the number of children aged less than 3, as they offer an alternative reason for their mothers' absence from the labour market. However, we don't include that variable among the covariates in order to avoid endogeneity issues. Estimations suggest that the presence of a child aged 0-2 is homogeneously distributed among the sample and does not change the size or the significance of our result. Detailed results are available upon request.

Results

Due to its length, generosity and universal access, parental leave and benefit system is a major criterion for Czech mothers' labour market participation decisions. The 1995 reform changes substantially the benefit payment setup, and we can expect this to have an impact on mothers' return to work between the end of the job protected PL and the end of the benefit payment. Estimation results confirm this presumption and indicate significant negative causal relation between the extension of the benefit and the probability of employment in the months following the end of the PL.

Before/After comparison

A simple before/after comparison by a linear probability model suggests that the probability of employment decreases by 19,8% for mothers who are targeted by the reform and who become eligible for the 12 extra benefits (i.e. who end their job protected PL)

between the January 1 st 1996 and September 30 th 1996, as compared to mothers who are noneligible and who ended their PL between the January 1 st 1995 and September 30 th 1995. We correct for heteroskedasticity, and we show that neither the significance nor the size of the effect varies with the survey weighting setup, or with the choice of covariates. It is however interesting to note that 3 covariates contain a value which is significantly related to the employment probability. Superior education has a large and positive effect on the probability of employment: ceteris paribus, having attended superior education comparatively to having graduated high school increases the probability of employment at the end of the PL by 16%.

As to age, belonging to the age group 30-39 comparatively to the age group 25-29 increases also the probability of employment, by 8%. Last but not least, having 3 children comparatively to having 1 child decreases the probability of employment by 10,5%. None of this result is surprising; they rather confirm general knowledge about factors of female labour supply.

The modification of the number of quarters before and after the reform gives less unambiguous results. The restriction to 2 quarters instead of 3 does not impact the significance of the parameter (it is still significant at 1% level), and its value remains comparable (18,8%). When we restrain to only 1 quarter before and after, however, the significance decreases to the 10% level and the size of the effect goes down to 10,5%. We should note that the size of the sample becomes very low with this restriction, only 164 treated and 155 control individuals. The 6 columns report the results of the following estimations: simple before/after comparison (1), robust (2), robust and weighted (3), robust, weighted and with covariates (4), robust, weighted, with covariates and with restricted number of quarters (5 and 6). The stability and the scope of the result suggest that the reform has indeed contributed to change mothers' return-to-work patterns; however it is not sufficient to assert causality.

Difference-in-differences estimation

The results obtained with the difference-in-differences method are fairly similar to the preliminary results; the effect of the reform appears now to be slightly higher (by 2 percentage points). In the following table, the column (1) reports the result of the before/after comparison, the columns (2) and (3) report the difference-in-differences estimation, without then with weights and covariates. The effect of the reform is represented by the variable "treat". The two last columns show that the result is independent of the survey weighting setup and of the choice of covariates. With the restriction of the number of quarters, the result follows the same evolution as in the linear probability model: same significance and fairly same scope if 2 quarters used, lower significance level and lower effect if 1 quarter used.

Superior education, 30-39 age group and having 3 children remain relevant categories among mothers' labour supply determinants, and another value comes to the surface for the education variable. Having none or elementary education appears to lower the probability of employment by 10,6%, which is also coherent with stylised facts. The difference-indifferences estimation features 2 additional variables, which capture seasonality and trend.

The seasonality parameter appears to be non-significant, which is logical given the structure of the sample: we compare the same period of the year, or should we say almost the whole year (9 months), with a 2 years interval. As to the trend, the coefficient is sizeable10 and significant, which was expectable given the evolution of the economic situation over the period. Indeed, the probability of mothers' employment was 22% higher in the first cohort (1995)(1996) compared to the second one (1997)(1998), simply because the situation in the labour market was worsening. With the rising threat of unemployment, workers' perspective in the labour market was degrading and the overall activity and employment rates were decreasing among the Czech labour force. Therefore a trend of lower employment rate exists in our data, and we account for it in the model. Once the trend captured, we get closer to the possibility to assert causality in the change of employment probability before and after the 1995 reform. We can now assert that the extension of the parental benefit, while leaving unchanged the duration of the PL, lowers the share of mothers who returned to work in the quarter after the end of their PL by 20,9%11 . The complete review of the different estimation methods results are reported in Table C in Appendix.

In order to go further in the interpretation of the results, we focus on the scope of the impact along the covariates values. The education appears particularly relevant for this specification. With the linear probability model, the negative effect of the reform is twice as strong for mothers who did not graduate high school compared to mothers who did graduate high school12 (28% and 14%). The difference-in-differences estimation gives a fairly similar result, respectively 29% and 17%. Therefore we note that the educational level stratifies strongly mothers' reaction to the reform. Mothers with lower education tend to be more sensitive to labour market withdrawal incentives, which is of course coherent with general knowledge about labour market attachment of women with different educational levels. The educational level can be used as a proxy for qualification and hence labour income: here the interpretation is that less educated mothers are more attracted to the extended parental benefit at the expense of employment, as the replacement rate is higher for them than for high paid female workers. The table of results for different educational levels is reported in Table D in Appendix.

Robustness checks

We challenge our estimation results, in order to confirm or disprove the stability of the coefficients we observed so far, by two robustness checks. The first one consists in selecting an alternative control cohort for the difference-in-differences estimation. Indeed, the 1997-1998 cohort might not be the clearest comparison group: even though we do not observe any legislative shock at the chosen date, the cohort is in fact exposed to the reform that occurred 2 years prior. Therefore, selecting the control cohort 2 years before the reform (1993)(1994), instead of 2 years after the reform (1997)(1998), would be a good alternative. However, the bad quality of the very first quarters of the survey at the beginning of the 1990's does not allow us to consider such cohort. We can only build the difference-in-differences estimation around October 1 st 1993 if we consider 1 quarter at each side of the date13 instead of 3. It can therefore be useful at least as a robustness check, and it confirms the significance at 1% and the substantial size of the causal effect of the 1995 reform on mothers' employment probability. The second application adds to the first one the idea of a placebo regression. In order to confirm that the change in mothers' employment probability before and after the reform is genuinely due to the reform, we will test the change in employment probability for another group of mothers who are not concerned by the reform. The legislative change applies to mothers whose child recently turned 3, therefore the labour market participation of mothers whose child recently turned 2 or 4 should remain unchanged before and after the reform. Or, more precisely, their employment probability may differ before and after the reform if there is a global trend of decreasing employment rates, but the causal analysis should be inconclusive.

We compare therefore the differences inside the placebo treated cohort (95-96) to the differences inside the placebo non-treated cohort (93-94), and indeed, the results confirm that this reform has no significant impact on mothers of younger or older children. The results for both are reported in table E.1 in Appendix.

However, introducing the evolution of employment rates of different groups of mothers (eligible and non-eligible) around the reform date brings along an additional angle of evaluating causal impact. If we assume that the employment rate of the eligible (with children who turn 3 after October 1 st 1995) would have followed the same evolution as that of mothers with children who turned 4 over the same period (non-eligible) 14 , the difference of the difference genuinely controls for the business cycle and leaves us with the causal effect of the reform. The following chart plots the employment rates of the eligible and the non-eligible around the reform date.

We observe a declining trend in employment rates for the non-eligible, and a markedly steeper decline for the eligible. Assuming that the trend would have been similar if no reform had occurred, the difference in slope represents the effect of the reform. This complementary 14 Which is not an obvious hypothesis: the non-eligible group had exhausted all PL rights one year prior to the observed period and can therefore react differently to the business cycle than mothers who exited PL very recently. Source: LFS, own calculations approach lowers by 7 points the size of the estimated effect of the reform; however, it confirms the high significance of the result. The results of this estimation are reported in table E.2 in Appendix.

Finally, apart from being an alternative control group, the population of mothers with children who recently turned 4 is particularly noteworthy for allowing us to extend the shortterm analysis. Starting from the last quarter of 1996 (one year after the reform implementation), the population is in fact composed of mothers who had been among the first eligible mothers. Therefore, the acceleration of the withdrawal from employment which we observe in 1997 -less than 30% of mothers are employed by the end of 1997 -coincides with the return to work behaviours at the end of the benefit extension. While the overall decline in employment rates can be business cycle related, change in the rhythm suggests that a substantial negative effect on female employment persists beyond the 12 months intended by the legislator.

Conclusions

The Czech post-transitional family policy drops the former emphasis on female labour market participation and strong intervention in public childcare supply. The new trend is therefore a rather family-conservative policy, the epitome of which is the evolution in the parental leave scheme. The 1995 Act on State Social Support brought along an unexpected extension of parental benefit payment by 12 months for all current and future recipients of this universally accessed benefit. This extension led to a disjunction of the job protected parental leave and the parental benefit duration, leaving to mothers the choice of 12 extra months of benefits at the expense of a secure post-PL return-to-work. We find a substantial impact of this reform on mothers' probability of employment within the first post-PL quarter. Indeed, the probability of employment of the eligible mothers decreased by 20% compared to the noneligible pre-reform cohort. Unsurprisingly, the decrease in employment probability is twice as strong for women with low educational level compared to women who graduated high school.

The robustness checks, while bringing the estimated effect of the reform to a size of 13% rather than 20%, confirm the high significance of the results. This reform had an explicit objective of withdrawing mothers from the labour market, in order to appease in the short-run the uprising unemployment threat. While we confirm that the reform reached its intended effect, further investigation is needed in order to assess The first 5 columns report the results of the preliminary before/after comparison (LPM, corrected for heteroskedasticity). The column (2) is weighted, (3) is extended with covariates, (4) and (5) restrain the quarters taken into account before and after the reform to respectively 2 and 1 instead of 3. The columns ( 6) and ( 7) report the results of the difference-in-differences estimation strategy. "Season" accounts for seasonality, "Trend" for maturation bias, i.e. trend in the outcome independent of the reform.

  FIGURE 2 SHARE OF EMPLOYED MOTHERS ONCE CHILD REACHES AGE 3 4

TABLE 1

 1

			DESIGN OF THE 1995 REFORM
		Targeted by the reform	Job protection (=PL)	Parental benefit	Child's age on October 1 1995	Situation after Oct 1 1995
	Child born before Oct 1 1992	No	36 months	36 months	More than 36 months (already aged 3)	PL over, benefit payment over
	Child born after Oct 1 1992	Yes	36 months	48 months	Less than 36 months (not yet aged 3)

TABLE 2

 2

	IMPACT OF THE EXTENSION OF PARENTAL BENEFIT (1995) ON POST-PL
		EMPLOYMENT PROBABILITY, 1st step (LPM)
		(1)	(2)	(3)	(4)	(5)	(6)
	VARIABLES		Dependent var.: To be employed or not to be employed
	post	-0.198***	-0.198***	-0.195***	-0.191***	-0.187***	-0.103*
		(0.0281)	(0.0284)	(0.0302)	(0.0305)	(0.0386)	(0.0528)
	Graduated HS			ref
	none or elementary				-0.0795	-0.0567	-0.0377
					(0.0558)	(0.0754)	(0.109)
	did not graduate HS				-0.0172	-0.0231	-0.0238
					(0.0329)	(0.0401)	(0.0536)
	superior education				0.161**	0.117	0.236**
					(0.0641)	(0.0776)	(0.103)
	married				-0.0249	0.00867	0.0317
					(0.0501)	(0.0584)	(0.0732)
	age_2529			ref
	age_1524				-0.0296	0.00160	-0.00587
					(0.0353)	(0.0437)	(0.0563)
	age_3039				0.0810**	0.0994**	0.0961
					(0.0378)	(0.0451)	(0.0649)
	child1			ref
	child2				-0.0329	-0.0586	-0.0358
					(0.0337)	(0.0421)	(0.0562)
	child3				-0.105**	-0.110**	-0.141**
					(0.0443)	(0.0524)	(0.0671)
	Constant	0.344***	0.344***	0.345***	0.382***	0.363***	0.278***
		(0.0202)	(0.0231)	(0.0244)	(0.0656)	(0.0787)	(0.0994)
	Observations	879	879	879	879	607	319
	R-squared	0.054	0.054	0.051	0.085	0.077	0.083
			Standard errors in parentheses
			*** p<0.01, ** p<0.05, * p<0.1

TABLE 3

 3

	IMPACT OF THE EXTENSION OF PARENTAL BENEFIT (1995) ON POST-PL
	EMPLOYMENT PROBABILITY, 2 nd step (Dif-in-Dif)
		(1)	(2)	(3)
	VARIABLES	To be employed vs. not to be employed
	post	-0.191***
		(0.0305)
	Graduated HS		ref
	None or elem.	-0.0795		-0.102***
		(0.0558)		(0.0298)
	HS, no grad	-0.0172		-0.0413*
		(0.0329)		(0.0213)
	Superior	0.161**		0.127***
		(0.0641)		(0.0460)
	married	-0.0249		-0.00844
		(0.0501)		(0.0273)
	age_2529		ref
	age_1524	-0.0296		-0.0313
		(0.0353)		(0.0215)
	age_3039	0.0810**		0.0603**
		(0.0378)		(0.0250)
	child1		ref
	child2	-0.0329		-0.0297
		(0.0337)		(0.0213)
	child3	-0.105**		-0.0713**
		(0.0443)		(0.0292)
	Season		0.0116	0.0170
			(0.0241)	(0.0236)
	Trend		0.211***	0.220***
			(0.0284)	(0.0292)
	Treat		-0.210***	-0.209***
			(0.0372)	(0.0383)
	Constant	0.382***	0.133***	0.162***
		(0.0656)	(0.0165)	(0.0376)
	Observations	879	1,703	1,703

TABLE 4

 4

	IMPACT OF THE REFORM ON EMPLOYMENT PROBABILITY
	WITH A CONTROL COHORT 1993-1994
	VARIABLES	Employment
	Season	0.116**
		(0.0515)
	Trend	0.0776
		(0.0485)
	Treat	-0.237***
		(0.0729)
	Graduated HS	ref
	None or elem.	-0.144**
		(0.0595)
	HS, no grad	-0.0585
		(0.0402)
	superior	0.0908
		(0.0694)
	married	-0.0263
		(0.0614)
	age_2529	ref
	age_1524	-0.0213
		(0.0406)
	age_3039	0.0769*
		(0.0458)
	child1	ref
	child2	-0.0774*
		(0.0419)
	child3	-0.134**
		(0.0521)
	Constant	0.330***
		(0.0794)
	Observations	702
	R-squared	0.058
	Robust standard errors in parentheses
	*** p<0.01, ** p<0.05, * p<0.1

TABLE B .

 B 1 SUMMARY STATISTICS OF THE SAMPLE (1)

			Non treated (Jan -Sept Reform cohort (1995-Control cohort 1 (1997-Treated (Jan -Sept Control cohort 2 (1993-
			1996)	1995)	1998)	1996)	1994)
	Controlled variables Controlled variables
	Mean age	Mean age		27,4	27,3	27,5	27,4	27,5
	Age groups, % Age groups, %
		15-24	15-24	30,7	31,3	28,5	30	27,7
		25-29	25-29	37,8	37,1	42	38,5	44,8
		30-39	30-39	31,5	31,5	29,5	31,5	27,5
	Mean number of children Mean number of		1,8		1,9
	children	Number of children, %	1,9		1,8		1,9
	Number of children, %	1		33,8		37,7
		1	2	35,8	52,5	37,9	44,8	26,8
		2	3 and more	48,5	13,7	48,2	17,5	57,6
		Married, % 3 and more		15,7	91,7	13,9	89	15,7
	Married, %	Educational level, %	90,4		87		94,2
	Educational level, %	None		0,28		0,5
		None	Elementary	0,4	10,2	0,2	8	0
		High school without Elementary	9,1		10,3		11,5
	High school without	exams		37,7		44,2
		High school graduated exams	41,1	42,2	43,7	39,7	40,5
	High school graduated	Superior	40,1	9,7	38,5	7,6	37
		Dependent variable Superior	8,6		7,2		11,1
	Economic activity, % Dependent variable
	Economic activity, %	ML or PL		37,7		56,3
		ML or PL	Study	47,3	0,6	55,8	0,1	57,3
		Study	Work	0,4	34,5	0,8	15	0,3
		Work	Unemployed	24,4	8,7	13	1,9	27,1
	Unemployed	Homemaker	5,2	18,2	1	26,1	7,6
		Homemaker	N	22,3	425	29	454	6,5
		N		879		824		383

TABLE C

 C

		IMPACT OF THE EXTENSION OF PARENTAL BENEFIT (1995) ON POST-
		PL EMPLOYMENT PROBABILITY, Summary
		(1)	(2)	(3)	(4)	(5)	(6)	(7)
	VARIABLES		Dependent var.: To be employed vs. not to be employed
	post	-0.198*** -0.195*** -0.191*** -0.187*** -0.103*
		(0.0284) (0.0302) (0.0305) (0.0386) (0.0528)
	Graduated HS				ref
	None or elem.			-0.0795	-0.0567	-0.0377		-0.102***
				(0.0558) (0.0754)	(0.109)		(0.0298)
	HS, no grad			-0.0172	-0.0231	-0.0238		-0.0413*
				(0.0329) (0.0401) (0.0536)		(0.0213)
	superior			0.161**	0.117	0.236**		0.127***
				(0.0641) (0.0776)	(0.103)		(0.0460)
	married			-0.0249	0.00867	0.0317		-0.00844
				(0.0501) (0.0584) (0.0732)		(0.0273)
	age_2529				ref
	age_1524			-0.0296	0.00160 -0.00587		-0.0313
				(0.0353) (0.0437) (0.0563)		(0.0215)
	age_3039			0.0810** 0.0994**	0.0961		0.0603**
				(0.0378) (0.0451) (0.0649)		(0.0250)
	child1				ref
	child2			-0.0329	-0.0586	-0.0358		-0.0297
				(0.0337) (0.0421) (0.0562)		(0.0213)
	child3			-0.105** -0.110** -0.141**		-0.0713**
				(0.0443) (0.0524) (0.0671)		(0.0292)
	Season						0.0116	0.0170
							(0.0241) (0.0236)
	Trend						0.211*** 0.220***
							(0.0284) (0.0292)
	Treat						-0.210*** -0.209***
							(0.0372) (0.0383)
	Constant	0.344*** 0.345*** 0.382*** 0.363*** 0.278*** 0.133*** 0.162***
		(0.0231) (0.0244) (0.0656) (0.0787) (0.0994) (0.0165) (0.0376)
	Observations	879	879	879	607	319	1,703	1,703
	R-squared	0.054	0.051	0.085	0.077	0.083	0.050	0.084
			Robust standard errors in parentheses
			*** p<0.01, ** p<0.05, * p<0.1

TABLE D IMPACT

 D OF THE EXTENSION OF PARENTAL BENEFIT (1995) ACCORDING TO EDUCATIONAL LEVEL Graduated HS Did not graduate HS VARIABLES Dependent var. : To be employed vs. not to be employed

	TABLE E.2 IMPACT OF THE EXTENSION OF PARENTAL BENEFIT (1995) ON POST-
		PL EMPLOYMENT PROBABILITY, Dif-in-Dif
			To be employed
		VARIABLES					or not
	Season	Post	0.0333	-0.0684*	0.0110
			(0.0436) (0.0349)	(0.0302)
	Trend	Eligible	0.178*** -0.223***	0.279***
			(0.0472) (0.0340)	(0.0453)
	Treat	Treat	-0.171*** -0.131***	-0.286***
			(0.0642) (0.0465)	(0.0549)
	married	-0.0103 Graduated HS	-0.0559		ref	0.00883	0.0164
		(0.123) None or elem.	(0.0710) -0.157*** (0.0588)	(0.0328)
	age_2529					ref (0.0429)
	age_1524	-0.0269 HS, no grad	-0.0458	-0.0174 -0.0110	-0.0185
		(0.0571)	(0.0397) (0.0258) (0.0494)	(0.0276)
	age_3039	0.0918 superior	0.0422		0.0985 0.115**	0.0745*
		(0.0576)	(0.0399) (0.0451) (0.0609)	(0.0387)
	child1	married				ref -0.0509
	child2	-0.0432	-0.0437	-0.0341 (0.0374)	-0.00915
		(0.0534) age_2529	(0.0365)	ref	(0.0491)	(0.0286)
	child3	-0.115 age_1524	-0.0928* -0.0979*** -0.0383	0.00535
		(0.0784)	(0.0550) (0.0286) (0.0654)	(0.0440)
	post	-0.140*** age_3039		-0.276*** 0.0955***
		(0.0472)				(0.0467) (0.0285)
	Constant	0.345*** Child1	0.227***	ref	0.365***	0.0679
		(0.122) child2	(0.0767) -0.150*** (0.0859)	(0.0429)
						(0.0265)
	Observations	357 child3	679	366 -0.260***	718
	R-squared	0.036	0.032			0.125 (0.0360)	0.105
		Robust standard errors in parentheses Constant 0.739***
		*** p<0.01, ** p<0.05, * p<0.1 (0.0482)
		Observations					1,706
		R-squared					0.176
		Robust standard errors in parentheses
		*** p<0.01, ** p<0.05, * p<0.1

The fertility trend of the 1960's reflects also the widely spread and affordable birth control means.

See Figure A in Appendix.

Many tools of the family policy follow a residual approach, aiming at low income families, but it cannot be thought of as an ideologically consistent liberal family policy, since there are no pressures on mothers to find private childcare and return on the labour market: on the contrary, the long PL scheme is maintained and reinforced.

As explained above, this reform was added to the bill later on, it was therefore not expectable.

This is valid for the before /after analysis, then we use the same number of quarters around the same date 2 years later.

The positive sign might be misleading, but the interpretation of the coefficient is the probability of employment in the first cohort(1995)(1996), taken the second cohort as reference(1997)(1998)). The employment rates were higher in the first period, the coefficient is therefore positive.

In order to make sure that the observed effect is not due to some specific feature of the chosen variable, we perform the difference-in-differences estimation on 2 alternative variables that account for economic activity in the survey (the recorded answers are correlated but not identical). The effect of the reform remains significant, of a comparable scope.

The values "graduated high school" and "did not graduate high school" represent more than 80% of the sample: the lack of significance of the coefficients of the remaining levels is most likely due to an insufficient sample size.

The summary statistics for that cohort are reported along with the other cohorts in TableB.1 in Appendix.

medium-run effects on mothers' labour market attachment: we could expect this reform to negatively affect further career and labour income of fragile groups of workers such as the above mentioned low educated women. The lack of good quality data for this period is however the major obstacle for analysing this turbulent post-transitional legislation and its effects on work-life balance behaviours. This could be a possible explanation of the scarcity of family policy evaluations in the Czech Republic, along with other Central Eastern European countries. Yet the persistence of the phenomenon until these days, 10 years after the European Union accession, suggests rather a certain lack of interest.

The European Union social integration process has played a major role in modelling family policy with respect to female employment, as the European Commission puts emphasis on female labour market attachment and on public child care services as tools for increasing mothers' labour supply. While childcare supply remains to this date a second-tier issue, the parental leave scheme has recently been remodelled in a way to fit the European trend and to incentivize faster return to employment: the effects of this policy shift remain to be assessed.

Appendix FIGURE A EMPLOYMENT GAP -WOMEN WITH CHILDREN UNDER THE AGE OF 6

Source : EU Labour Force Survey, in European Commission Indicators for monitoring the Employment Guidelines (2010)

The motherhood-related employment gap is defined as the difference in employment rates between women without children in pre-school age and with children in pre-school age.