Maternity leave and female labor force participation: evidence from 159 countries
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Maternity leave and female labor force participation: evidence from 159 countries Elena Del Rey1 · Andreas Kyriacou1 · Jose´ I. Silva1,2 Received: 1 November 2019 / Accepted: 10 September 2020 / © Springer-Verlag GmbH Germany, part of Springer Nature 2020
Abstract In this paper, we account for the direct and indirect effects of maternity leave entitlements on female labor force participation. We first explore theoretically the impact of maternity leave duration on female labor supply in the presence of fertility decisions. We assume that maternity leave duration affects female labor supply through two main channels: reducing the time cost of female market work, and reducing women’s earnings. Our theoretical model allows for non-monotonic effects of leave duration on female labor supply. We test the predictions of our model using an unbalanced panel of 159 countries for the years 1994, 2004, and 2011. We confirm the existence of an inverted U-shaped relationship between maternity leave duration and female participation, and find a maternity leave threshold of around 30 weeks above which female participation falls. Below this threshold, increasing maternity leave increases female labor force participation because the positive effect due to the reduction of work–time cost of employed mothers strongly dominates the negative wage penalty effect. Beyond this threshold, the opposite happens. Our analysis also confirms the relevance of social norms for female labor supply throughout the world. Keywords Female labor force participation · Fertility · Maternity leave · Social norms. JEL Classification D13 · J13 · J16 · J22. Responsible editor: Alessandro Cigno Jos´e I. Silva
[email protected] Elena Del Rey [email protected] Andreas Kyriacou [email protected] 1
Universitat de Girona, Campus de Montilivi, Girona 17003, Spain
2
University of Kent, Canterbury, England
E. Del Rey et al.
1 Introduction It is generally acknowledged that the impact of maternity leave on labor market outcomes depends, in part, on the duration of leave. Using data for 9 European countries over the period 1969–1993, Ruhm (1998) shows that a parental leave of around 3 months is associated with increases in the employment of women, especially those of child-bearing age, while lengthier leaves (around 9 months) have no impact on employment but are associated with lower female hourly earnings. Th´evenon and Solaz (2012) exploit a sample of 30 OECD countries between 1970 and 2010 and find that parental leave below 2 years has a positive effect on female employment, while longer leaves reduce employment. For the USA, Rossin-Slater (2017) reports non-monotonic effects of family leave policies on women’s employment rates: while leave entitlements less than 1 year in length improve their employment rates, longer leaves can have negative effects. Focusing on Canada, Baker and Milligan (2008) find that leave entitlements of 17–18 weeks do not change the amount of time women spend away from work, but longer leaves of up to 70 weeks lead them to
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