Scandinavian Working Papers in Economics

Working Paper Series,
IFAU - Institute for Evaluation of Labour Market and Education Policy

No 2012:22: Labour supply responses to paid parental leave

Arizo Karimi (), Erica Lindahl () and Peter Skogman Thoursie ()
Additional contact information
Arizo Karimi: IFAU - Institute for Evaluation of Labour Market and Education Policy, Postal: P O Box 513, SE-751 20 Uppsala, Sweden
Erica Lindahl: IFAU - Institute for Evaluation of Labour Market and Education Policy, Postal: P O Box 513, SE-751 20 Uppsala, Sweden
Peter Skogman Thoursie: Department of Economics, Stockholm University

Abstract: Women account for the majority of parental leave take-up, which is likely one of the major reasons for the gender gap in income and wages. Consequently, many countries exert effort to promote a more gender equal division of parental leave. Indeed, the last decades have seen an increase in fathers’ take-up of parental leave benefits, but the gender earnings gap has remained fairly constant. In this paper we re-evaluate the labour supply responses of both mothers and fathers to three major reforms in the Swedish parental leave system, recognizing that take up of paid parental leave might not fully reflect actual time off from work in a system where job-protection exceeds paid leave. We find that both mothers and fathers decreased their labour supply to the same extent as a response to an increase in paid parental leave without gender restrictions. In contrast, we find no support for any changes in fathers’ labour supply due to reforms introducing gender quotas in paid leave.

Keywords: natural experiment; parental leave; labour supply

JEL-codes: J13; J16; J22; J48

35 pages, November 26, 2012

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