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Does Parental Leave Affect Fertility and Return-to-Work? Evidence from a "True Natural Experiment"

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Author Info
Rafael Lalive () (University of Zurich, CESifo and IZA Bonn)
Josef Zweimüller (University of Zurich, CEPR, CESifo and IZA Bonn)

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Abstract

We study the causal effects of changes in parental leave provisions on fertility and return-towork behavior. We exploit a policy change that took place in 1990 in Austria which extended the maximum duration of parental leave from the child’s first to the child’s second birthday. As parental leave benefits can be automatically renewed when a new mother is still on leave from a previous child, this created a strong incentive to "bunch" the time off work in case of multiple planned children and/or to increase fertility. We study the quantitative effect of this incentive using an empirical strategy which resembles a true experimental set-up very closely. In particular, assignment to treatment is random and treated and controls face (almost) identical environmental conditions. We find that treated mothers have a 4.9 percentage points (or 15 percent) higher probability to get an additional child within the following three years; and a 3.9 percentage points higher probability in the following ten years. This suggests that not only the timing but also the number of children were affected by the policy change. We also find that parental leave rules have a strong effect on mothers’ return-to-work behavior. Per additional months of maximum parental leave duration, mothers’ time off work is reduced by 0.4 to 0.5 months. The effects of a subsequent policy change in 1996 when maximum parental leave duration was reduced from the child’s second birthday to the date when the child became 18 months old brought about no change in fertility behavior, but a labor supply effect that is comparable in magnitude to the one generated by the 1990 policy change. This can be rationalized by the incentives created through automatic benefit renewal.

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Publisher Info
Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 1613.

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Length: 44 pages
Date of creation: May 2005
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Handle: RePEc:iza:izadps:dp1613

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Related research
Keywords: parental leave fertility pro-natalist policy family and work obligations return to work labor supply

Other versions of this item:

Find related papers by JEL classification:
J13 - Labor and Demographic Economics - - Demographic Economics - - - Fertility; Family Planning; Child Care; Children; Youth
J18 - Labor and Demographic Economics - - Demographic Economics - - - Public Policy
J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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  5. Del Boca, Daniela & Pasqua, Silvia & Pronzato, Chiara, 2004. "Why Are Fertility and Women’s Employment Rates So Low in Italy? Lessons from France and the U.K," IZA Discussion Papers 1274, Institute for the Study of Labor (IZA). [Downloadable!]
  6. Marco Francesconi, 2002. "A Joint Dynamic Model of Fertility and Work of Married Women," Journal of Labor Economics, University of Chicago Press, vol. 20(2), pages 336-380, Part. [Downloadable!]
    Other versions:
  7. Daniela Del Boca, 2002. "The effect of child care and part time opportunities on participation and fertility decisions in Italy," Journal of Population Economics, Springer, vol. 15(3), pages 549-573. [Downloadable!] (restricted)
    Other versions:
  8. Paul Gregg & Elizabeth Washbrook & Carol Propper & Simon Burgess, 2005. "The Effects of a Mother's Return to Work Decision on Child Development in the UK," Economic Journal, Royal Economic Society, vol. 115(501), pages F48-F80, 02. [Downloadable!] (restricted)
  9. Kevin Milligan, 2005. "Subsidizing the Stork: New Evidence on Tax Incentives and Fertility," The Review of Economics and Statistics, MIT Press, vol. 87(3), pages 539-555, 06. [Downloadable!] (restricted)
    Other versions:
  10. Whittington, Leslie A & Alm, James & Peters, H Elizabeth, 1990. "Fertility and the Personal Exemption: Implicit Pronatalist Policy in the United States," American Economic Review, American Economic Association, vol. 80(3), pages 545-56, June. [Downloadable!] (restricted)
    Other versions:
  11. Lawrence M. Berger & Jane Waldfogel, 2004. "Maternity leave and the employment of new mothers in the United States," Journal of Population Economics, Springer, vol. 17(2), pages 331-349, 06. [Downloadable!] (restricted)
  12. Boyer, George R, 1989. "Malthus Was Right after All: Poor Relief and Birth Rates in Southeastern England," Journal of Political Economy, University of Chicago Press, vol. 97(1), pages 93-114, February. [Downloadable!] (restricted)
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  14. Christopher J. Ruhm, 1998. "The Economic Consequences Of Parental Leave Mandates: Lessons From Europe," The Quarterly Journal of Economics, MIT Press, vol. 113(1), pages 285-317, February. [Downloadable!] (restricted)
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  15. Hotz, V Joseph & Miller, Robert A, 1988. "An Empirical Analysis of Life Cycle Fertility and Female Labor Supply," Econometrica, Econometric Society, vol. 56(1), pages 91-118, January. [Downloadable!] (restricted)
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  17. Christopher J. Ruhm & Jackqueline L. Teague, 1995. "Parental Leave Policies in Europe and North America," NBER Working Papers 5065, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Del Bono, Emilia & Weber, Andrea & Winter-Ebmer, Rudolf, 2008. "Clash of Career and Family. Fertility Decisions after Job Displacement," Economics Series 222, Institute for Advanced Studies. [Downloadable!]
    Other versions:
  2. David Rahman & Ichiro Obara, 2008. "Secret Contracts for Efficient Partnerships," Working Papers 2008-3, University of Minnesota, Department of Economics, revised 06 2008. [Downloadable!]
    Other versions:
  3. Fehr, Ernst & Singer, Tania, 2005. "The Neuroconomics of Mind Reading and Empathy," CEPR Discussion Papers 5128, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
    Other versions:
  4. repec:ese:iserwp: is not listed on IDEAS
  5. Borck, Rainald, 2007. "Federalism, Fertility and Growth," CESifo Working Paper Series CESifo Working Paper No. , CESifo GmbH. [Downloadable!]
  6. Herwig Immervoll & David Barber, 2006. "Can Parents Afford to Work? Childcare Costs, Tax-Benefit Policies and Work Incentives," IZA Discussion Papers 1932, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
  7. Ernst Fehr & Urs Fischbacher & University of Zurich, 2005. "Neuroeconomic Foundations of Trust and Social Preferences," IZA Discussion Papers 1641, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
  8. Juergen Janger & Johann Scharler & Alfred Stiglbauer, 2006. "The Potential Growth prospects of the Austrian Economy - Methods and Determinants," Monetary Policy & the Economy, Oesterreichische Nationalbank (Austrian Central Bank), issue 1, pages 24-52, May 2006. [Downloadable!]
  9. Dustmann, Christian & Schönberg, Uta, 2008. "The Effect of Expansions in Maternity Leave Coverage on Children's Long-Term Outcomes," IZA Discussion Papers 3605, Institute for the Study of Labor (IZA). [Downloadable!]
  10. Falk, Armin & Fehr, Ernst & Zehnder, Christan, 2005. "The Behavioural Effects of Minimum Wages," CEPR Discussion Papers 5115, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
    Other versions:
  11. Würtz, Astrid, 2007. "The Long-Term Effect on Children of Increasing the Length of Parents' Birth-Related Leave," Working Papers 07-11, University of Aarhus, Aarhus School of Business, Department of Economics. [Downloadable!]
  12. C. Katharina Spiess & Katharina Wrohlich, 2006. "The Parental Leave Benefit Reform in Germany: Costs and Labour Market Outcomes of Moving towards the Scandinavian Model," IZA Discussion Papers 2372, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
  13. Uta Schönberg & Johannes Ludsteck, 2007. "Maternity Leave Legislation, Female Labor Supply, and the Family Wage Gap," IZA Discussion Papers 2699, Institute for the Study of Labor (IZA). [Downloadable!]
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