What is the Case for Paid Maternity Leave?

By Gordon B. Dahl, K. Løken, Magne Mogstad, K. Salvanes. Social Science Research Network, 2013

235 citations recorded by the source corpus.

Paid maternity leave has gained greater salience in the past few decades as mothers have increasingly entered the workforce. Indeed, the median number of weeks of paid leave to mothers among OECD countries was 14 in 1980, but had risen to 42 by 2011. We assess the case for paid maternity leave, focusing on parents' responses to a series of policy reforms in Norway which expanded paid leave from 18 to 35 weeks (without changing the length of job protection). Our first empirical result is that none of the reforms seem to crowd out unpaid leave. Each reform increases the amount of time spent at home versus work by roughly the increased number of weeks allowed. Since income replacement was 100% for most women, the reforms caused an increase in mother's time spent at home after birth, without a reduction in family income. Our second set of empirical results reveals the expansions had little effect on a wide variety of outcomes, including children's school outcomes, parental earnings and participation in the labor market in the short or long run, completed fertility, marriage or divorce. Not only is there no evidence that each expansion in isolation had economically significant effects, but this null result holds even if we cumulate our estimates across all expansions from 18 to 35 weeks. Our third finding is that paid maternity leave is regressive in the sense that eligible mothers have higher family incomes compared to ineligible mothers or childless individuals. Within the group of eligibles, the program also pays higher amounts to mothers in wealthier families. Since there was no crowd out of unpaid leave, the extra leave benefits amounted to a pure leisure transfer, primarily to middle and upper income families. Finally, we investigate the financial costs of the extensions in paid maternity leave. We find these reforms had little impact on parents' future tax payments and benefit receipt. As a result, the large increases in public spending on maternity leave imply a considerable increase in taxes, at a cost to economic efficiency. Taken together, our findings suggest the generous extensions to paid leave were costly, had no measurable effect on outcomes and regressive redistribution properties. In a time of harsh budget realities, our findings have important implications for countries that are considering future expansions or contractions in the duration of paid leave.

Subfields: Demography, Gender Studies, Sociology and Political Science

View Paper: https://www.semanticscholar.org/paper/abf5c1f66bb663bc956449af112343ca10289f47

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Citations in the corpus

Does paternity leave reduce fertility? (2019, background): “On the other hand, Dahl et al. (2016) find no fertility effects of two extensions of paid maternity leave in Norway.”
Bargaining over Babies: Theory, Evidence, and Policy Implications (2019, background): “Regarding parental leave benefits, Dahl et al. (2016) find that expansions of paid maternity leave in Norway increased mothers’ time out of the labor market after a birth, but did not increase fertility.”
Reserving Time for Daddy: The Consequences of Fathers’ Quotas (2019, unknown): “Expansions in maternity leave were found to delay mother’s return to work and increase job continuity but have little effect on employment in the long run, both in Canada (Baker and Milligan, 2008a,b; Hanratty and Trzcinski, 2009; Baker and Milligan, 2010, 2015) and in Europe (Liu and Skans, 2010; D”
Childhood Circumstances and Adult Outcomes: Act II (2018, unknown): “(2016), Dahl et al. (2016), and Isen, Rossin-Slater, and Walker (2016) study the impact of policies that were rolled out 30 to 40 years ago.”
Early Maternal Time Investment and Early Child Outcomes (2016, background): “25 In addition to these methods, Del Boca et al. (2012) use mother fixed effects on a subsample of siblings.”
The Pros and Cons of Sick Pay Schemes: Testing for Contagious Presenteeism and Noncontagious Absenteeism Behavior (2016, background): “…leave schemes (Gruber 1994; Ruhm 1998; Waldfogel 1998; Ruhm 2000; Rossin-Slater et al. 2013; Lalive et al. 2014; Carneiro et al. 2015; Thomas 2015; Dahl et al. 2016) due to the negative externalities induced by contagious presenteeism in combination with information frictions about the type and…”