This article analyses the effects of the German parental leave benefit, which was introduced in 2007, on household income and fertility. The analysis combines SOEP and German Micro Census data in order to apply techniques based on event history analysis (SOEP) as well as differential analyses based on a high number of cases (Micro Census).

It is argued that on average, the income situation of families with babies has slightly improved, but this is due to a considerable raise for highly-educated parents. The results for fertility correspond to these income effects: The multivariate analyses for the transition to the second child show no reform effect regarding the total population. However, there are interesting group-specific effects. Age-specific fertility rates, which are based on Micro Census data, are increasing among 35- to 44-year-old highly-educated women. In addition, the event history analysis shows a significant effect for the interaction of reform and this age group. Both suggest that the parental leave benefit has an effect on recuperation among highly-educated women who are at least in their mid-thirties.