# **4.5.6 Paid Family Leave: Impact on Living Standards**

The evidence reviewed on paid family leave shows, on one hand, that prolonged absences from the labor market might reduce labor market attachment; and on the other, that allowing workers to take time off a job (they can come back to) when they need it might reduce turnover and have beneficial effects both in terms of wages as well as employment levels.

**The impact of paid family leave on employment:** In a cross-country comparison, more generous family-friendly policies have been shown to lead to increased women’s employment, but they might do so via more part-time work and reduced access to high-level positions (Blau and Kahn, 2013).

However, more recent evidence for the United States, using more complex research designs and micro-data shows conflicting views. On the one hand, Byker (2016) finds that after the introduction of paid parental leave in California and New Jersey, women who otherwise would have exited the labor force temporarily in the months around a birth experienced an increase in labor force attachment, making them more inclined to continue participating in the labor force. On the other, Bailey et al. (2019) use administrative data to study the effects of California’s new paid leave on women’s careers and find no effects in the short run on women’s employment, earnings, or attachment to employers—but negative effects in the long run on employment and wages.

Rossin-Slater (2017) reviews the recent literature on maternity and family leave policies, not only in the US but also around the world, and finds are positive long-run effects on women’s employment outcomes in terms of job continuity and employment rates of less than 1-year-long leave; but that longer leaves can negatively affect women’s earnings, employment, and career advancement. Similarly, Sch ̈onberg and Ludsteck (2014), exploit Germany’s 5 major maternity leave expansions to find a very small negative effect on new mothers’ employment in the long run, despite finding very strong short-term negative effects.

For LMICs, there is not much existing evidence. UNICEF (2019) presents stylized facts on the coverage and discuss the (likely) effects of paid family leave in a discursive manner. The study shows that millions of working women worldwide are not covered by paid parental leave and that the situation is even worse for parents. (Two-thirds of the world’s children under 1 year old live in countries where fathers are not covered by regulations.) The study also mentions that in low- and middle-income countries, paid maternity leave has positive effects on labor force participation.

There is also evidence of the effects of family leave on the coworkers of the worker taking the leave. This evidence shows there is no negative effect on their employment outcomes. Brenøe et al. (2020) provide evidence that in Denmark coworkers of a woman going on leave see temporary increases in their hours, earnings, and likelihood of being employed.

# **4.5.7 Paid Family Leave: Impact on Productivity**

Paid family leave allows for time off when needed by families, which might help preserve productive labor matches. While more research is needed, the current evidence shows minimal impacts of 70