Parental Leave and Mothers' Careers: The Relative Importance of Job Protection and Cash Benefits

Abstract

Job protection and cash benefits are key elements of parental leave (PL) systems. We study how these two policy instruments affect return-to-work and medium-run labour market outcomes of mothers of newborn children.Analysing a series of major PL policy changes inAustria, we find that longer cash benefits lead to a significant delay in return-to-work, particularly so in the period that is job-protected. Prolonged parental leave absence induced by these policy changes does not appear to hurt mothers' labour market outcomes in the medium run. We build a non-stationary model of job search after childbirth to isolate the role of the two policy instruments. The model matches return-to-work and return to same employer profiles under the various factual policy configurations. Counterfactual policy simulations indicate that a system that combines cash with protection dominates other systems in generating time for care immediately after birth while maintaining mothers' medium-run labour market attachment.

The Economic Consequences of Family Policies: Lessons from a Century of Legislation in High-Income Countries

“…While fertility effects are stronger for women with below-median pre-birth earnings, the short-run reduction in earnings is larger for high-wage than for low-wage women. Later Austrian reforms of 1996 and 2000 shortened and extended, respectively, entitlement to replacement benefits, leaving job-protected leave unchanged, and Lalive, Schlosser, Steihauer, and Zweimüller (2013) estimate that longer cash benefits significantly delay return to work of mothers when leave is job-protected, but less so once job protection has expired. Germany enacted five major expansions in maternity leave coverage between 1979 and 1993, which led to gradual and staggered extensions in job-protected leave from 2 to 36 months and in the time of receipt for cash benefits from 2 to 24 months.…”

Pension Wealth and Maternal Employment: Evidence from a Reform of the German Child Care Pension Benefit

“…Studies find indeed that mothers tend to adjust their employment behavior when (paid) parental leave is provided (Lalive and Zweimüller, 2009;Lalive et al, 2014;Bergemann and Riphahn, 2010;Kluve and Tamm, 2009;Schönberg and Ludsteck, 2014). …”

“…In the long-run, however, the longer absenteeism from the labor market does not seem to harm employment and earnings of mothers. Lalive et al (2014) show that a combination of job-protection and cash benefits is most effective to encourage mothers in returning to the labor market after childbirth.…”

Effects of Parental Leave Policies on Female Career and Fertility Choices

“…Most previous papers in this literature identify the policy effects by the difference-in-differences estimator (Ruhm (1998), , Baker and Milligan (2008a) and Asai (2015)) or by the regression discontinuity designs (Lalive and Zweimüller (2009), Schönberg and Ludsteck (2014), and Lalive, Schlosser, Steinhauer, and Zweimüller (2014)). The main difference from these previous papers is that this paper conducts ex ante evaluation of PL reforms by taking a structural estimation approach.…”