How maternity leave policies affect female employment: A Cross country analysis

This study examines how maternity leave policies affect female labor force participation (FLP) across 160 countries from 2000 to 2023. We analyze the crucial but overlooked dimension of payment structure whether governments or employers bear the costs. Using fixedeffects panel regression models, we find that leave duration alone shows no significant effect on FLP in full sample. However, government-funded maternity leave is associated with 1.49 percentage points higher participation rates. Crucially, we uncover heterogeneous effects by income level: in upper-middle-income countries, longer leave durations reduce FLP when costs fall on employers but this negative effect vanishes when leave is publicly funded. In low-income countries, extended leave modestly boosts participation, while high-income countries show diminishing returns to paid leave. Our findings challenge the assumption that longer leave universally benefits FLP, demonstrating instead that policy design especially public financing is pivotal for mitigating unintended labor market disincentives. These insights are critical for policymakers seeking to balance gender equity with economic efficiency in maternity leave reforms.