Parental Leave and Labour Market Outcomes: Lessons from 40 Years of Policies in OECD countries

Abstract

Paid parental leave has gained greater salience in the past few decades with the growing participation of mothers in the workforce. Indeed, the average number of weeks of paid leave to mothers among OECD countries increased from 17 in 1980 to 48 weeks by 2011, but with very large cross-country variations. We investigate how increases in periods of paid leave after a birth affect prime-age labour market outcomes for men and women in 30 OECD countries from 1970 to 2010. We also examine gender differences in outcomes. We find that extensions of paid leave have a positive, albeit small, influence on female employment rates and on the gender ratio of employment, as long as the total period of paid leave does not exceed two years. Weeks of paid leave also raise the average number of hours worked by women relative to men, up to a certain limit. By contrast, the provision of paid leave widens the earnings gender gap among full-time employees.