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The Economic Consequences Of Parental Leave Mandates: Lessons From Europe
Abstract and Figures
This study investigates the economic consequences of rights to paid parental leave in nine European countries over the 1969
through 1993 period. Since women use virtually all parental leave in most nations, men constitute a reasonable comparison
group, and most of the analysis examines how changes in paid leave affect the gap between female and male labor market outcomes.
The employment-to-populations ratios of women in their prime childbearing years are also compared with those of corresponding
aged men and older females. Parental leave is associated with increases in women's employment, but with reductions in their
relative wages at extended durations.
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... While parental leave policies have been shown to have a positive effect on female job continuity, there is also the concern that they foster gender inequality in other labor market outcomes (Ruhm 1998). For example, Sweden has a very generous system of family benefits. ...
... Therefore, a sufficiently large maternity leave period could encourage women's continuity in the job. On the other hand, prolonged job absences make women less valuable in the labor market due to human capital depreciation (Becker 1985, Ruhm 1998. As a result, women could delay even further their re-employment decision. ...
Important gender differences still persist in many labor market outcomes. This paper argues that the design of parental leave policies can play an important role in shaping these differences. A summary of the literature reveals that extended maternity leave mandates increase female labor force participation at the cost of lower wages, less presence of women in high-profile occupations and a more traditional division of tasks within the family. Periods of leave exclusively reserved for fathers are proposed as a policy instrument to increase men's participation in family tasks and facilitate women's progress in the professional career. The paper concludes with a revision of these policies and their implications for gender equality.
... This one-period labor-leisure model, however, misses mothers' key labor force participation decisions, which are not made when their youngest child enters school, but rather when their children are infants. Labor force decisions are most germane, and thus policy impacts will be most keenly felt for mothers of infants for at least two reasons: (1) Women who take substantial time away from the labor market have trouble reentering the labor markets and experience lower wages throughout their careers (Ruhm 1998;Waldfogel 1997;Lundberg and Rose 2000;Anderson et al. 2003). Time away from the labor force comes with a substantial wage penalty and mothers of infants have a longer time horizon for which to bear or avoid this reality; (2) The relationship between time away and the resulting wage penalty is likely non-linear. ...
We estimate the effect of state-level policies enacting universal free full-day kindergarten on mothers’ labor supply using a life-cycle analysis. Similar to previous research on childcare and labor supply, we find that free full-day kindergarten increases labor force participation rates for mothers whose youngest child is kindergarten-aged by 4.3 to 7.1 percentage points. We find that for mothers whose youngest child is an infant, labor force participation increases by 7.2 to 9.8 percentage points, and for women whose youngest child is 3 to 4 years old labor force participation increases by 5.9 to 7.9 percentage points. The fact that the policies impact the labor supply for mothers of younger-than-kindergarten-age children by even more than for mothers of kindergarten-aged children is important for understanding the full effect of subsidized childcare. This is consistent with a life-cycle model of labor supply where wages and prices in future periods impact mothers’ labor force attachment.
... A vast majority of countries around the world have instituted maternity benefits and maternity leave policies in line with global conventions laid down by the International Labour Organization (ILO). 1 While a major rationale for enhanced maternity leave durations globally has been to allow women to spend more time on child care resulting in better child outcomes (Andres, Baird, Bingenheimer, & Markus, 2016;Baker & Milligan, 2008;Dustmann & Sch€ onberg, 2012;Fallon, Mazar, & Swiss, 2017;Ginja, Jans, & Karimi, 2020;Liu & Skans, 2010;Rasmussen, 2010;Ruhm, 2000;Tanaka, 2005), the impacts of such policies on women's labor market outcomes have also been historically studied with interest (Besamusca, Tijdens, Keune, & Steinmetz, 2015;Finlay, 2021;Gruber, 1994;Ruhm, 1998;Ruhm & Teague, 1997). 2 The effect of maternity benefits on female labour force participation (FLFP) depends on the design of the maternity leave policies, specifically the duration and how paid leave is funded. For instance, Sch€ onberg and Ludsteck (2014) show that expansion in maternity leave coverages reduces mothers' post-birth employment rates in the context of Germany, where women are entitled to get 3 years of partially paid leave. ...
In this paper we study the extension of paid maternity leave from 12 weeks to 26 weeks in India to estimate its effect on the contractual arrangements of working women. To identify causal effects, we exploit the variation generated by the institutional features of the policy mandate in India, which applies only to establishments employing 10 workers or more. We find that women are 4.3 percentage points less likely to be employed as regular salaried workers in the establishments as a result of this policy. We also show that there is an increase in the employment of women as unpaid and wage labourers in establishments, but no change takes place in women entrepreneurship. The effects appear to be driven by married and younger women confirming that the extension of maternity leave imposes a motherhood penalty in terms of women's labor market opportunities.
... • Amin and Islam (2022) examine the links between the legally mandated length of maternity leave and firm-level female employment and find a significant, positive association. However, long periods outside the labor market also risk reducing skills and earnings (Ruhm 1998; Edin and Gustavsson 2008) (Figure 11.2). In addition, providing parental leave only to women can encourage employer discrimination and discourage employers from hiring women for positions that require costly qualification and training periods (Mandel and Semyonov 2005). ...
This paper theorizes the interplay of public and organizational policies by investigating whether the Family and Medical Leave Act (FMLA) shifted patterns of gender inequality within U.S. workplaces. Did this leave law increase women’s representation in positions of authority (moving more women into management jobs)? We argue that the impact of public policies will vary by organizational context, hypothesizing different effects by organizations’ points of departure—the corporate policies in place when public policy changes. Analyzing establishment-level panel data from approximately 800 U.S. private-sector establishments in 1990–1997, we found that women’s representation in managerial positions increased in the years immediately after the FMLA. Importantly, women’s representation in management increased the most in workplaces that provided more generous leave benefits even before the FMLA. The increase in managerial representation was most prominent for women of color. Consistent with relational inequality theory, these findings suggest that women may find it easier to make claims for leave and for career advancement when both legal and organizational policies lend legitimacy to their claims. More broadly, this study points to the need to explicitly evaluate how policy impacts vary by organizational norms and commitments.
Do family policies reduce gender inequality in the labor market? We contribute to this debate by investigating the joint impact of parental leave and childcare, using administrative data covering Austrian workers over more than half a century. We start by quasi-experimentally identifying the causal effects of all family policy reforms since the 1950s on the full dynamics of male and female earnings. We then map these causal estimates into a decomposition framework to compute counterfactual gender inequality series. Our results show that the enormous expansions of parental leave and childcare have had virtually no impact on gender convergence. (JEL D63, J13, J16, J31, J32)
The article explores the association between within-household couples’ parental leave take-up strategies and parents’ earning capacity (hourly wages) and their workplace characteristics. The results, based on the social security register data from Luxembourg, reveal that a couple strategy where both partners take parental leave is more likely when the partners have equal earning capacity, when the mother works in the sector of education, health and social services rather than in other sectors, and when the father is employed in a larger-sized company. Couples where the mother earns more than the father are more likely to opt for a strategy where neither parent takes any leave. The economic sector moderates the effect of fathers’ wages on the probability of choosing the strategy where both partners take leave.
Although existing studies have suggested that men's leave‐taking positively affects children's development and their involvement in childcare and household chores in the long run, the underlying mechanism remains unclear. To shed light on this ambiguity, this study develops a dynamic collective household model and analyses household decisions on parental leave‐sharing between spouses, resource allocation, home production, and labour supply. We demonstrate that gender equality in bargaining positions within families before leave‐taking is crucial in explaining the positive impacts of men's leave‐taking. Specifically, if women's intrahousehold bargaining power before taking parental leave is sufficiently low, their husbands are unlikely to take leave, and women's positions may deteriorate after leave. Consequently, households may allocate fewer resources to children, and men may not actively participate in childcare and household chores. Our model suggests that implementing parental leave policies for both genders may not be sufficient; simultaneous measures to increase women's bargaining power are necessary to encourage men to take parental leave and maximize the policies' benefits.
Preface Introduction Rebecca M. Blank 1: Evaluating the Connection between Social Protection and Economic Flexibility Rebecca M. Blank, Richard B. Freeman. 2: Trends in Social Protection Programs and Expenditures in the 1980s Peter Scherer 3: Does Employment Protection Inhibit Labor Market Flexibility? Lessons from Germany, France, and Belgium Katharine G. Abraham, Susan N. Houseman. 4: Patterns in Regional Labor Market Adjustment: The United States versus Japan Edward B. Montgomery 5: Housing Market Regulations and Housing Market Performance in the United States, Germany, and Japan Axel Borsch-Supan 6: Health Insurance Provision and Labor Market Efficiency in the United States and Germany Douglas Holtz-Eakin 7: Social Security and Older Workers' Labor Market Responsiveness: The United States, Japan, and Sweden Marcus E. Rebick 8: Public Sector Growth and Labor Market Flexibility: The United States versus the United Kingdom Rebecca M. Blank 9: Does Public Health Insurance Reduce Labor Market Flexibility or Encourage the Underground Economy? Evidence from Spain and the United States Sara de la Rica, Thomas Lemieux. 10: Social Welfare Programs for Women and Children: The United States versus France Maria J. Hanratty 11: Three Regimes of Child Care: The United States, the Netherlands, and Sweden Siv Gustafsson, Frank P. Stafford. Contributors Author Index Subject index
The chapters of this book are arranged according to a perceived relationship between two concerns: that parents need time with their new-born infants to establish patterns of trust and integrate family relationships; and that the quality of day care infants receive contributes both to their own development as well as to that of the total family system. These two foci are interrelated, because time for parent-infant interaction in the early months helps prepare the infant for the upcoming daily separations and reunions; and also because day care can play a role in supporting the family. Further, leaves for parenting can help families achieve an adequate quality of life, measured not only in economic terms, but also in familial satisfaction. The seven sections of the book address the parent-child relationship, with each section focused on one particular aspect of what working parents face in the first year of their child's life.
In part I, two such aspects are examined: the need that exists today for an established national infant-care-leave policy, and the conditions of the past that have led to the formulation of leave policies for mothers who work.
Because so many infants are currently being placed into day care at very young ages, part II examines to what extent the infant's needs are being met.
What a family needs to get off to a good start, and how parents feel about the growing conflict between their work and parenting roles, provides the basis for part III.
Part IV involves a consideration of existing support for leave by both business and government.
In looking at the leave policies of other countries, part V provides a background of experience against which to measure U.S. efforts to formulate such a natural policy.
As the United States attempts to formulate its own national infant-care-leave policy, it faces legal, financial, and political challenges, and these issues are examined in part VI.
Finally, part VII looks to the future. Chapter 21 presents the recommendations of the Bush Center Advisory Committee on Infant Care Leave. The conclusion, by Zigler and Frank, reviews those factors which any policy formulation and implementation must take into consideration: the increasing need for out-of-home care for young infants; how such a policy will work in actuality; who is responsible for cost; and what, ideally, we can expect from an enlightened and sound infant-care-leave policy. (PsycINFO Database Record (c) 2012 APA, all rights reserved)
CPS data for 1979 to 1988 are used to examine the determinants of employment, actual work, and maternity leave for women in the year following childbirth. Women with better market skills (higher expected wages, older, more education) are more likely than other new mothers to have a job and to work. Among employed women, paid leave is also positively related to market skills. Work responds to childbirth more than employment does, with the greatest differences in the first three months following childbirth. Therefore, most women working when their child was one year old had returned to work within three months of childbirth.
The differential availability of maternity leave benefits is shown to be an important factor in the earnings attainment process of women. Interaction effects with this job characteristic are found for experience, occupational status, and crowding. The human capital model's explanation of the relationship between women's hometime, women's job choice, and public policy is critically examined. The results indicate that the provision of adequate child care needs to be coupled with parental leave policies if women are to make significant gains in earnings from reducing their time spent at home.
This study examines how far men and women in equivalent employment situations enjoy equal social security rights, and to what extent there is a need for specific protection of women as mothers and as workers with family responsibilities. The authors argue for a move towards personal entitlement to social security for women independent of their financial and marital status, in line with their growing integration into the world of work.