Scandinavian Working Papers in Economics

Working Papers,
University of Aarhus, Aarhus School of Business, Department of Economics

No 04-1: Career Interruptions due to Parental Leave - A Comparative Study of Denmark and Sweden

Elina Pylkkänen () and Nina Smith ()
Additional contact information
Elina Pylkkänen: University of Göteborg and the Ministry of Finance,, Postal: Ministry of Finance, Sweden, SE – 103 33 Stockholm,
Nina Smith: Department of Economics, Aarhus School of Business, Postal: Prismet, Silkeborgvej 2, DK 8000 Aarhus C, Denmark

Abstract: Parental leave mandates are associated with high female employment rates, but with reductions in relative female wages if leave is of extended duration. We analyze the impact of family policies (parental leave and childcare prices) of Denmark and Sweden on women’s career breaks due to childbirth. These countries are culturally similar and share the same type of welfare state ideology, but differ remarkably in pursued family policies. Our analysis takes advantage of the availability of comparable longitudinal data and allows us to estimate parallel models across the two countries. The impact of family policies and economic incentives on the probability of returning to the labor market is estimated using a duration model approach. Our results show that economic incentives affect the behavior of mothers in both countries. However, the parental leave mandates as such are very important determinants for the observed behavior. Based on policy simulations we find that if fathers were given more parental leave, it would promote the labor supply of women.

Keywords: Maternal Leave; Parental Leave; Childcare; Family Policy; Mothers’ Labor Supply

JEL-codes: J10; J22

43 pages, May 26, 2004

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