IDEAS home Printed from https://ideas.repec.org/p/zur/iewwpx/242.html
   My bibliography  Save this paper

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

Author

Listed:
  • Rafael Lalive
  • Josef Zweim�ller

Abstract

We study the causal effects of changes in parental leave provisions on fertility and return-to-work 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 of 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 of 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.

Suggested Citation

  • Rafael Lalive & Josef Zweim�ller, "undated". "Does Parental Leave Affect Fertility and Return-to-Work? Evidence from a �True Natural Experiment�," IEW - Working Papers 242, Institute for Empirical Research in Economics - University of Zurich.
  • Handle: RePEc:zur:iewwpx:242
    as

    Download full text from publisher

    File URL: https://www.econ.uzh.ch/apps/workingpapers/wp/iewwp242.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Jan M. Hoem & Alexia Prskawetz & Gerda R. Neyer, 2001. "Autonomy or conservative adjustment? The effect of public policies and educational attainment on third births in Austria," MPIDR Working Papers WP-2001-016, Max Planck Institute for Demographic Research, Rostock, Germany.
    2. 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.
    3. Michael P. Keane & Kenneth I. Wolpin, 2002. "Estimating Welfare Effects Consistent with Forward-Looking Behavior. Part I: Lessons from a Simulation Exercise," Journal of Human Resources, University of Wisconsin Press, vol. 37(3), pages 570-599.
    4. Lawrence M. Berger & Jennifer Hill & Jane Waldfogel, 2005. "Maternity leave, early maternal employment and child health and development in the US," Economic Journal, Royal Economic Society, vol. 115(501), pages 29-47, February.
    5. 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.
    6. 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;European Society for Population Economics, vol. 15(3), pages 549-573.
    7. Melissa Schettini Kearney, 2004. "Is There an Effect of Incremental Welfare Benefits on Fertility Behavior?: A Look at the Family Cap," Journal of Human Resources, University of Wisconsin Press, vol. 39(2).
    8. Michael Baker & Kevin Milligan, 2005. "How Does Job-Protected Maternity Leave Affect Mothers' Employment and Infant Health?," NBER Working Papers 11135, National Bureau of Economic Research, Inc.
    9. Leslie Whittington, 1992. "Taxes and the Family: The impact of the tax exemption for dependents on marital fertility," Demography, Springer;Population Association of America (PAA), vol. 29(2), pages 215-226, May.
    10. Rosenzweig, Mark R & Schultz, T Paul, 1985. "The Demand for and Supply of Births: Fertility and Its Life Cycle Consequences," American Economic Review, American Economic Association, vol. 75(5), pages 992-1015, December.
    11. 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.
    12. Sakiko Tanaka, 2005. "Parental leave and child health across OECD countries," Economic Journal, Royal Economic Society, vol. 115(501), pages 7-28, February.
    13. Christopher J. Ruhm, 1998. "The Economic Consequences of Parental Leave Mandates: Lessons from Europe," The Quarterly Journal of Economics, Oxford University Press, vol. 113(1), pages 285-317.
    14. Heckman, James J & Walker, James R, 1990. "The Relationship between Wages and Income and the Timing and Spacing of Births: Evidence from Swedish Longitudinal Data," Econometrica, Econometric Society, vol. 58(6), pages 1411-1441, November.
    15. 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 48-80, February.
    16. 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 545-556, June.
    17. Ted Joyce & Robert Kaestner & Sanders Korenman & Stanley Henshaw, 2004. "Family Cap Provisions and Changes in Births and Abortions," NBER Working Papers 10214, National Bureau of Economic Research, Inc.
    18. Del Boca, Daniela & Pasqua, Silvia & Pronzato, Chiara D., 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 of Labor Economics (IZA).
    19. Guy Laroque & Bernard Salanié, 2004. "Fertility and Financial Incentives in France," CESifo Economic Studies, CESifo, vol. 50(3), pages 423-450.
    20. Lawrence M. Berger & Jane Waldfogel, 2004. "Maternity leave and the employment of new mothers in the United States," Journal of Population Economics, Springer;European Society for Population Economics, vol. 17(2), pages 331-349, June.
    21. 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, August.
    22. Hahn, Jinyong & Todd, Petra & Van der Klaauw, Wilbert, 2001. "Identification and Estimation of Treatment Effects with a Regression-Discontinuity Design," Econometrica, Econometric Society, vol. 69(1), pages 201-209, January.
    23. John Ermisch, 1988. "Econometric Analysis of Birth Rate Dynamics in Britain," Journal of Human Resources, University of Wisconsin Press, vol. 23(4), pages 563-576.
    24. Pylkkänen, Elina & Smith, Nina, 2004. "The Impact of Family-Friendly Policies in Denmark and Sweden on Mothers' Career Interruptions Due to Childbirth," IZA Discussion Papers 1050, Institute of Labor Economics (IZA).
    25. Robert Moffitt, 1984. "Profiles of Fertility, Labour Supply and Wages of Married Women: A Complete Life-Cycle Model," Review of Economic Studies, Oxford University Press, vol. 51(2), pages 263-278.
    26. Mark R. Rosenzweig, 1999. "Welfare, Marital Prospects, and Nonmarital Childbearing," Journal of Political Economy, University of Chicago Press, vol. 107(S6), pages 3-32, December.
    27. Jacob Klerman & Arleen Leibowitz, 1999. "Job continuity among new mothers," Demography, Springer;Population Association of America (PAA), vol. 36(2), pages 145-155, May.
    28. repec:eme:rlepps:v:18:y:1999:i:1999:p:41-74 is not listed on IDEAS
    29. Susan L. Averett & Leslie A. Whittington, 2001. "Does Maternity Leave Induce Births?," Southern Economic Journal, John Wiley & Sons, vol. 68(2), pages 403-417, October.
    30. Susan L. Averett & Leslie A. Whittington, 2001. "Does Maternity Leave Induce Births?," Southern Economic Journal, John Wiley & Sons, vol. 68(2), pages 403-417, October.
    31. Michael P. Keane & Kenneth I. Wolpin, 2002. "Estimating Welfare Effects Consistent with Forward-Looking Behavior. Part II: Empirical Results," Journal of Human Resources, University of Wisconsin Press, vol. 37(3), pages 600-622.
    32. 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.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Lalive, Rafael & Zweimüller, Josef, 2005. "Does Parental Leave Affect Fertility and Return-to-Work? Evidence from a "True Natural Experiment"," IZA Discussion Papers 1613, Institute of Labor Economics (IZA).
    2. Elmallakh, Nelly, 2021. "Fertility, Family Policy, and Labor Supply: Quasi-Experimental Evidence from France," GLO Discussion Paper Series 984, Global Labor Organization (GLO).
    3. Matthias Doepke & Anne Hannusch & Fabian Kindermann & Michèle Tertilt, 2022. "The Economics of Fertility: A New Era," NBER Working Papers 29948, National Bureau of Economic Research, Inc.
    4. Colin Cannonier, 2014. "Does the Family and Medical Leave Act (FMLA) Increase Fertility Behavior?," Journal of Labor Research, Springer, vol. 35(2), pages 105-132, June.
    5. Laroque, Guy & Salanié, Bernard, 2005. "Does Fertility Respond to Financial Incentives?," CEPR Discussion Papers 5007, C.E.P.R. Discussion Papers.
    6. Volker Meier, 2005. "The impact of family policies on fertility: An international comparison Study commissioned by the Robert Bosch Foundation," ifo Forschungsberichte, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, number 26, March.
    7. Chiara Pronzato, 2009. "Return to work after childbirth: does parental leave matter in Europe?," Review of Economics of the Household, Springer, vol. 7(4), pages 341-360, December.
    8. Taryn Ann Galloway & Rannveig Kaldager Hart, 2015. "Effects of income and the cost of children on fertility. Quasi-experimental evidence from Norway," Discussion Papers 828, Statistics Norway, Research Department.
    9. Azmat, Ghazala & González, Libertad, 2010. "Targeting fertility and female participation through the income tax," Labour Economics, Elsevier, vol. 17(3), pages 487-502, June.
    10. Guy Laroque & Bernard Salanié, 2004. "Fertility and Financial Incentives in France," CESifo Economic Studies, CESifo, vol. 50(3), pages 423-450.
    11. Del Boca, Daniela & Sauer, Robert M., 2009. "Life cycle employment and fertility across institutional environments," European Economic Review, Elsevier, vol. 53(3), pages 274-292, April.
    12. Wookun Kim, 2023. "Baby Bonus, Fertility, and Missing Women," Departmental Working Papers 2308, Southern Methodist University, Department of Economics.
    13. Anne Gauthier, 2007. "The impact of family policies on fertility in industrialized countries: a review of the literature," Population Research and Policy Review, Springer;Southern Demographic Association (SDA), vol. 26(3), pages 323-346, June.
    14. Wookun Kim, 2020. "Baby Bonus, Fertility, and Missing Women," Departmental Working Papers 2011, Southern Methodist University, Department of Economics.
    15. Alma Cohen & Rajeev Dehejia & Dmitri Romanov, 2007. "Do Financial Incentives Affect Fertility?," NBER Working Papers 13700, National Bureau of Economic Research, Inc.
    16. C. Spiess & Katharina Wrohlich, 2008. "The Parental Leave Benefit Reform in Germany: Costs and Labour Market Outcomes of Moving towards the Nordic Model," Population Research and Policy Review, Springer;Southern Demographic Association (SDA), vol. 27(5), pages 575-591, October.
    17. Jérôme Adda & Christian Dustmann & Katrien Stevens, 2017. "The Career Costs of Children," Journal of Political Economy, University of Chicago Press, vol. 125(2), pages 293-337.
    18. Haan, Peter & Wrohlich, Katharina, 2011. "Can child care policy encourage employment and fertility?: Evidence from a structural model," Labour Economics, Elsevier, vol. 18(4), pages 498-512, August.
    19. Rafael Lalive & Analía Schlosser & Andreas Steinhauer & Josef Zweimüller, 2014. "Parental Leave and Mothers' Careers: The Relative Importance of Job Protection and Cash Benefits," Review of Economic Studies, Oxford University Press, vol. 81(1), pages 219-265.
    20. Mike Brewer & Anita Ratcliffe & Sarah dSmith, 2012. "Does welfare reform affect fertility? Evidence from the UK," Journal of Population Economics, Springer;European Society for Population Economics, vol. 25(1), pages 245-266, January.

    More about this item

    Keywords

    Parental leave; fertility; pro-natalist policy; family and work obligations; return to work; labor supply;
    All these keywords.

    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

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:zur:iewwpx:242. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Severin Oswald (email available below). General contact details of provider: .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.