Our research shows that a modest paid leave program of six additional weeks—with equal access for mothers and fathers—may have the unintended effect of increasing labor market inequities between women and men. Greater take-up of paid leave among women (relative to men) tends to reinforce long-standing gender norms and childcare patterns, which have limited women’s labor market advancement.
Our research uses large-scale tax data from the Internal Revenue Service and Social Security Administration to evaluate the cumulative effects of California Senate Bill 1661, which introduced a paid family leave insurance program, on women’s careers and childbearing up to 12 years after they give birth. Beginning on July 1, 2004, the paid family leave program offered parents an additional six weeks of partially paid leave to bond with a newborn. This new bonding leave supplements the six weeks of partially paid disability leave already provided by California’s short-term disability insurance program.
Our research design relies on differences in women’s ability to take consecutive weeks of paid parental leave after the paid family leave program’s implementation. Six weeks of paid family leave under the program became available for women giving birth as early as August 2003, but only eligible women giving birth after May 20, 2004, could take those weeks immediately after six weeks of short-term disability leave. Our analysis finds that women who could take consecutive short-term disability leave and paid family leave were 16 percentage points more likely to take paid family leave than women giving birth earlier. This difference allows us to compare women who gave birth after May 20, 2004, with women who gave birth earlier and thus were less likely to take paid family leave.
Our findings challenge the conventional wisdom that paid leave improves women’s career outcomes. Averaging among all mothers, our findings provide no evidence that the additional paid leave impacted career outcomes. However, among women giving birth for the first time after paid family leave benefits became available, employment fell by 6 percent, and annual earnings decreased by 13 percent relative to women who gave birth before the benefits program began. Moreover, these negative earnings effects persisted for over a decade: Wage earnings remained 13 percent lower 9–12 years later. These estimates imply a loss in lifetime earnings of $83,000 (discounted to the present day). However, our research finds no evidence of negative employment or earnings effects for women who had an additional child after the paid family leave insurance program’s implementation. Furthermore, our findings reveal that women with the lowest pre-pregnancy earnings who took paid family leave bore the brunt of the negative employment and earnings effects. Overall, our research suggests that the paid family leave insurance program has not narrowed the gender pay gap nor reduced the child penalty for mothers. On the contrary, the program may have exacerbated these gaps, especially among women earning lower wages. Finally, another counterintuitive finding is that paid family leave has not appeared to increase childbearing despite advocates’ claims to the contrary.
In short, even modest paid leave programs—with equal access for mothers and fathers—may unintentionally nudge women out of the labor force. Our findings also help interpret research on Europe’s paid leave programs, whose considerably more generous benefits have failed to eliminate the child penalty and gender pay gap over the past several decades. Given the growing research on the health and well-being benefits of paid family leave policies, US policymakers favoring these benefits may want to consider alternative implementation strategies to mitigate the potentially adverse effects on women’s employment and careers.
