The effect of own and spousal parental leave on earnings

This paper investigates the effect of parental leave – both own and spousal – on subse quent earnings using different sources of variation. Using fixed-effect models, and in line with previous results, parental leave is found to decrease each parent’s future earn ings. Also spousal leave is important, but only for mothers. In fact, each month the fa ther stays on parental leave has a larger positive effect on maternal earnings than a sim ilar reduction in the mother’s own leave. Using two reforms of the parental leave system as exogenous sources of variation yields only imprecisely estimated effects, even though the reforms had a strong effect on parental leave usage. However, the point es timates tentatively suggest effects in the same range or larger than the fixed-effects model found.

Keywords: parental leave, gender equality, earnings
JEL-codes: J13, J16, J24