Publisher/Institution: University of Michigan
Abstract: This paper analyzes the effects of paid parental leave on birth-related interruptions in women’s labor-force participation. Using monthly data on labor-force participation from the Survey of Income and Program Participation, I measure interruptions as labor-force exits from 24 months before to 24 months after births. I compare interruptions for women who give birth in states that implement paid parental leave laws–California and New Jersey–to interruptions for women who give birth in states that do not. I find that paid leave mandates have little impact on exits lasting longer than six months but substantially decrease the incidence of exits lasting less than six months. The effects are only present for mothers with less than a college degree who are less likely to have private paid leave. While short-duration leave of the type mandated in California and New Jersey is unlikely to change the behavior of women who take prolonged exits from the labor force, my findings confirm the claim that paid leave laws may induce some women to work more. In particular, by reducing brief exits, the laws enable low-skill women to choose participation patterns around birth that more closely resemble those of more-educated women. This increased attachment to employers may impact accumulated experience and long-term earnings growth.