<p>We analyze the causal effects of a parental leave benefit reform on parents in Germany. The reform added new features to the existing scheme increasing flexibility for take-up and providing incentives for parents to work part-time during the parental leave phase. We exploit the quasi-experimental allocation of births around the eligibility date to estimate intent-to-treat-effects of the reform on parental leave take-up, parents’ labor market involvement, intra-couple childcare division and institutional childcare demand and uptake. We find that parental leave take-up of college-educated fathers in the treatment group is higher than that in the control group. Furthermore, fathers in the treatment group reduce working hours but we do not observe any significant changes for mothers. However, mothers in the treatment group whose partners have a college degree report that they would like to work more hours when returning to the labor market compared to those in the control group. While we do not find effects on intra-couple childcare division, our analysis reveals higher demand for institutional childcare among parents in the treatment group in case the father holds a college degree. However, higher childcare demand is only reflected by higher uptake among parents with children aged three or older. We suggest that parents’ heterogeneity regarding their work arrangements and gender role orientations as well as constraints in public childcare provision for toddlers might explain our findings.</p>