"An important feature of Scandinavian welfare states is the transfer of resources to families with children. Long parental leave and provision of high-quality subsidized day care are important policies in this regard. This paper evaluates the impact of a recent Norwegian family policy reform on the labour supply of native and immigrant women in Norway. The reform provides cash benefits to families with 1–3-year-old children who do not utilize state-subsidized day care centres. We find that the effect of the reform on labour force participation of women is fairly modest. However, given participation, earnings of natives and immigrants fell after the cash-benefit reform. Specifically, earnings of highly educated non-Western immigrants fell by more than those of natives."

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