We use rich and precise administrative data to study the causal effect of subsidized employment on first time mothers' labor market outcomes up to 8 years after the birth. We apply propensity score matching combined with an event study design to determine the causal effects of taking up a subsidized Minijob after a first birth. We compare this employment choice to similar but unsubsidized, i.e., regular employment. Our results indicate that mothers who take up Minijob employment after a first birth are significantly less likely to be regularly employed and earn significantly lower wages even 8 years after the birth. The high rate of Minijob employment among first time mothers after the birth drives a substantial share of the child penalty of German mothers.
Please contact Katrin Sommerfeld if you wish to participate in the event.