This research project is divided into two separate sub-projects. The first concentrates on analyzing the effects of family leave policies in the United States. The analysis uses micro data from the U.S. to evaluate the economic issues related to parental leaves. The change in Federal and State level parental leave mandates in the 1980s and 1990s provide an interesting setting in which the career impacts of parental leaves can be evaluated. The second research stream will perform a similar evaluation using Finnish data. Finland has an extensive family leave policy that was developed over the last 40 years, providing a useful comparison to the United States. The project is funded by the 35th Anniversary Fund of the WCW.
Maternity leaves are often applauded for their beneficial effects on the wellbeing of both the child and the mother. It is also believed that mandated maternity leaves improve women’s economic position by allowing them to retain their former employment during and after pregnancy. While previous research has evaluated the effects of maternity leaves on female labor market participation and employment, few studies have conducted rigorous evaluations on the long-term effects of such leaves on women’s labor market careers.
Framework and Research Strategy
This research project is divided into two separate sub-projects running simultaneously, each with a dedicated team and budget. The first stream concentrates on analyzing the effects of family leave policies in the United States. The analysis uses micro data from the U.S. to evaluate the economic issues related to maternity leaves. The identification strategy is discussed in detail below. The second research stream will perform a similar evaluation using Finnish data. Finland has an extensive family leave policy that was developed over the last 40 years, providing an interesting comparison to the United States.
Both the U.S. and Finnish data enable the identification of the effects of maternity leave due to changes and variations in the family leave policies over time and across firms. First, the Family and Medical Leave
Act (FMLA) states that all U.S. employers with at least 50 employees should offer up to 12 weeks of unpaid maternity leave, with benefits, to eligible employees. In addition, 15 States have created their own FMLA-like legislation or other parental leave legislation that affects the mandated leave length or coverage. Some States may provide a better coverage than the Federal FMLA requirements. These variations create discontinuities in the eligibility of women who work for firms that fall just under and just over those State and Federal firm size cut‐offs, and thereby enable the estimation of the effects of the maternity leaves.
Second, the Finnish data allows the researchers to exploit legal changes in mandated maternity leave entitlements to evaluate the effects of such leaves on women’s long-term labor market success. The stepwise changes increased maternity leave length from just 9 weeks in 1971 to 10 months in 1981. It is also feasible compare the effect of parental leave on men’s and women’s labor market outcomes, as men have also been entitled to parental leave since 1978.
Unlike most of the previous maternity leave studies, this study will take a wider perspective on women’s labor market careers. In particular, the economic outcomes of interest include a) women’s return to employment post-birth (with the same employer versus a different employer), b) the number of months it takes to return to work after child birth, c) risk of unemployment, d) short- and long term growth in wage earnings, and e) incidence of hiring, firing and promotions (data permitting). Together these economic outcomes offer an extensive view of the women’s labor market careers in the U.S. and Finland.