The effect of own and spousal parental leave on earnings

This paper investigates the effect of parental leave – both own and spousal – on subse­quent 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 earn­ings. Also spousal leave is important, but only for mothers. In fact, each month the fa­ther stays on parental leave has a larger positive effect on maternal earnings than a sim­ilar 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 es­timates 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