The family gap and family friendly policies: the case of Norway

Norway has among the most generous family policies in the world. The most recent is the cash-for-care reform, which was implemented in 1998. We answer two main questions in this article: What is the level of the family gap in such a generous regime and how has it developed as a consequence of the latest reform? Results suggest that the family gap is rather modest in Norway compared to many other countries and we find no evidence of a worsening of the gap in recent years. A positive interpretation of these results is that the Norwegian labour market is fairly flexible, in the sense that it seems to be able to absorb even more generous family policies.