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
Evolution of the Child Penalty, with Kristiina Huttunen
How much have changes in family policies affected the costs of motherhood? 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 leave and child-care policies. 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 availability of formal subsidized day care, and the length of paid parental leave expanded significantly. The introduction of the home care allowance, a subsidy that encouraged mothers to stay home with their children, coincided with the stop in the child penalty decline.
Does Paid Parental Leave Affect Children’s Schooling Outcomes? Replicating Danzer and Lavy (2018). Revise & Resubmit (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. The extension of the maximum duration from 12 to 24 months had no significant effect on average but the authors highlight the existence of large and significant heterogenous effects that vary in sign depending on the education of mothers. The policy increased the scores obtained by sons of highly educated mothers, as measured in standard deviations, by 0.33 in Reading and 0.40 in Science. On the contrary, sons of lower educated mothers experienced a decrease of 0.27 in Reading and 0.23 in Science. In this article, I replicate their study following the appropriate estimation procedure that takes into account that PISA relies on imputation to derive student scores. I show that the estimates of the effects of the parental leave extension become substantially lower and non-significant.
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