twenty-four weeks (starting from up to four weeks prior to birth), the CCB is payable after the PLB period ends for up to two years after birth, and the CCA is payable after the PLB and the CCB periods end for up to three years after birth. The PLB and the CCB are based on prior employment and earnings, while the CCA is a fixed allowance equal to the minimum old-age pension (less than two-thirds of the PLB/CCB of minimum wage earners), available regardless of labor market history. Mothers who are not eligible for the PLB and the CCB receive the CCA for up to three years after giving birth. We focus on the PLB and the CCB which had similar conditions with the benefit amount equal to 70% of pre-birth earnings. The only major difference between the two is that while the PLB is not capped, the maximum amount of the CCB is 140% of the monthly minimum wage. Thus any social security contributions paid based on earnings above twice the minimum wage do not further increase the amount of the CCB. Since 96% of beneficiaries are women and our data does not allow us to identify fathers because we rely on records of giving birth in health data, we refer to the PLB and the CCB as “maternity benefit” and study only mothers, though, for the CCB, the same eligibility conditions apply to fathers if they are the primary caregiver.

To be eligible for maternity benefits, the mother must be insured for social security for at least 365 days during the two years before giving birth. Until December 2014, the monthly benefits were set at 70% of a woman’s average monthly earnings over the last calendar year before benefit receipt.<sup>6</sup> Since January 2015, by default, the amount of the benefit is 70% of average earnings over the 180-day period preceding the third month before giving birth. For example, for a woman who gave birth on October 1, 2014, the reference period was January to December 2013; but for a woman who gave birth on October 1, 2016, the reference period was January to June 2016. This modification was enacted by Parliament in December 2014, one month before it took effect, ruling out anticipation effects. For births between January and October 2015, part of the pregnancy took place before the policy change, so we focus on births after October 2015 when analyzing the post-reform period.

# **2.2 Contribution-Benefit Link**

Table 1 shows the costs and benefits of a $1 increase in (reported) monthly gross earnings during the benefit calculation window. The first and third columns show a scenario with no tax evasion. Panel (a) shows that a $1 increase in gross earnings costs the employer $1.27, while the employee receives an extra $0.66 in net earnings. Panel (b) shows that as a result of higher earnings, before December 2014, the employee would have received $0.26 of extra gross benefits ($0.20 net), which increased to $0.70 ($0.54 net) from January 2015. The difference arises because (i) before December 2014, the benefit calculation window was twelve months (the calendar year before the receipt of benefits), while since January 2015, it has been six months (the first six months of the pregnancy) and (ii) before December 2014, increasing reported earnings only impacted benefits if the birth took place in the next calendar year. Thus an

> 6If someone did not have at least 180 insurance days in that calendar year, then her average earnings over the 180 days before benefit receipt served as the basis for the calculation.

4