The Strong Case for Paid Parental Leave
“This is Not The Way We Teach This,” read the New York Times headline in response to a new National Bureau of Economic Research (NBER) working paper that reported results from a study of California’s paid family and medical leave policy. Contrary to past research that suggested positive work and wage effects of California’s policy, this new study found that it decreased new mothers’ employment and earnings a decade out.
The study examined the impact of California’s 2004 expansion of paid parental leave under the state’s Temporary Disability Insurance (TDI) program, from 6 weeks post-birth for mothers to 12 weeks for new mothers and 6 weeks for fathers. The authors analyzed tax data on all California moms who gave birth before the policy change to the time after and found no difference in their employment levels. Mothers who gave birth for the first time and took paid leave experienced reduced employment by 2.4 percent in the first 5 years after birth, and 5.4 percent after 11 years.
To be sure, public policy should be based on a basket of evidence, not a single study. That said, these results raise an important question: what employment effects should we expect from paid parental leave policy? Researchers posit several plausible explanations for how paid parental leave might affect employment, both of which have some support from the research literature.
On one hand, researchers argue that paid parental leave could boost women’s employment and wages by increasing the likelihood that a new mother returns to her pre-birth employer. Parents may have more time to work out a childcare arrangement before heading back to work, both the mother and child may have more positive physical outcomes, and the mother in general might be less overwhelmed. Additionally, the presence of paid leave could encourage women of childbearing age to stay in the labor force longer than they otherwise would in order to claim the benefit. Some research supports these views, finding that California’s policy resulted in more leave-taking among mothers and more hours worked and higher wages for them over the long-term.
But paid leave could also decrease maternal employment or have no effect at all. After all, the availability of up to 12 weeks of paid leave is unlikely to alter the long-term financial needs of a family, suggesting limited influence over whether a mother works in the long-term or not. This argument is consistent with findings from a study of early state adopters of temporary assistance for new mothers through disability insurance programs. Further, a mother may decide to shift more time to childrearing instead of working after spending more time with her newborn, consistent with the findings from the new NBER working paper.
The most important revelation offered by this new research is that we still have a lot to learn about the employment effects of a national paid parental leave policy. Even so, we should not lose sight of the broader goals of paid parental leave — namely, that employment is not the only factor of importance. The NBER working paper also analyzed survey data on parental investments following the California policy and found that mothers who took paid leave were more likely to report reading with their child, going on outings with their child, and eating breakfast together. Other research found that California’s policy increased parental time spent with children, increased breastfeeding, and resulted in better infant and parental health.
Families with access to paid leave are also less likely to receive welfare benefits and take on debt. A study by Pew Research reported that more than half (57%) of low-income households who didn’t receive full pay during parental leave took on debt, and nearly half (48%) went on public assistance. Another study found that 40% fewer new moms relied on food stamps the year after their child was born when a public paid leave program was in place.
At the end of the day, paid parental leave offers more choices to parents who face difficulties balancing work with raising children. This is why we remain committed to our nonpartisan recommendation for an 8-week federal paid parental leave policy as part of the 2017 AEI-Brookings Working Group. In light of this new study, we believe that supporting strong families through a paid parental leave policy remains long overdue and that the benefits for the health and wellbeing of American families still outweigh any costs.
Abby McCloskey is the principal and founder of McCloskey Policy, LLC and Angela Rachidi is a resident scholar at the American Enterprise Institute. Both were members of the 2017 AEI-Brookings Working Group on Paid Leave.
