The Impacts of Maternity and Parental Leave Reforms on Parents: Evidence from Finland
Mothers Working and Children’s Outcomes: The Impacts of Maternity and Parental Leave in Finland
Evolution of the Child Penalty, with Kristiina Huttunen
Have costs of motherhood changed over time, and how much have changes in family policies contributed to these changes? This paper presents evidence on the evolution of the child penalty in Finland over the last 50 years. During this time, Finland has gone through several family policy reforms that radically improved the conditions of new parents. Mothers went from having no paid maternity leave at the beginning of the 1960s to being granted one the most generous and longest parental leaves in the world. Exploiting population-wide administrative records from 1970 until today, we illustrate how changes in the child penalty have evolved alongside changes in family policies and changes in selection into motherhood. The child penalty in Finland has decreased by almost 60% since the 1970s, from around 60% to 25%. However, most of the decline happened in the first ten years, during which both the availability of formal subsidized day care and the length of paid parental leave expanded significantly. The child penalty stopped its decline in the second half of the 1980s, at the same time as the introduction of the “child homecare allowance”, a subsidy that encourages mothers to stay home with their children until the youngest child’s third birthday. The introduction and later extensions of paternity leave did not correspond with any changes in the child penalty.
Does Paid Parental Leave Affect Children’s Schooling Outcomes? Replicating Danzer and Lavy (2018). Accepted at Journal of Applied Econometrics
Danzer and Lavy (2018) study how the duration of paid parental leave affects children’s educational performance using data from PISA. An extension of the maximum duration from 12 to 24 months in Austria had no statistically significant effect on average, but the authors highlight the existence of large and statistically significant heterogenous effects that vary in sign depending on the education of mothers and children’s gender. The policy increased the scores obtained by sons of highly educated mothers by 33% of a standard deviation (SD) in Reading and 40% SD in Science. On the contrary, sons of low educated mothers experienced a decrease of 27% SD in Reading and 23% SD in Science. In this article, I replicate their study following the recommended estimation procedure taking into account both the survey’s stratified two-stage sample design and the fact that PISA relies on imputation to derive student scores. I show that the estimates of the effects of the parental leave extension become substantially smaller in absolute magnitude and non-significant.
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