We study how parental resources early in life affect children’s health and education exploiting the so-called speed premium (SP) in the Swedish parental leave system. The SP grants mothers higher parental leave benefits for the subsequent child without re-establishing eligibility through pre-birth market work if the two births occur within a pre-specified interval. This allow us to use a Regression Discontinuity framework. We find that the SP improves the educational outcomes of the first-born child, but not of the second-born. Impacts are driven by a combination of a positive income shock, and substitution from informal care to maternal time.
J13: Fertility; Family Planning; Child Care; Children; Youth
J22: Time Allocation and Labor Supply
J18: Demographic Economics: Public Policy