Reducing maternal labor market detachment: A role for paid family leave

Abstract

More than one quarter of working women leave the labor force when they have a child. Half of these detachments last at least 10 years and as many as 20 percent last 17 years or more, shrinking the U.S. workforce. Access to paid family leave (PFL) offers many private benefits, but may also offer the public benefit of increasing women’s participation in the labor force. We rely on the implementation of PFL in California in 2004 to examine long-term impacts on women’s labor force participation. We find that, prior to implementation of paid leave, maternal labor market detachment is 25 percent following a birth; it attenuates over time to five percent but takes 14 years to reach that level, and remains significantly different from zero. We find that access to PFL at the time of a birth significantly increases labor market participation by more than five percentage points (21 percent) in the year of a birth; its impact attenuates over time but remains significantly different from zero as much as nine years later. Impacts are greatest among women with bachelor’s degrees, for whom PFL reduces maternal detachment by 12 percentage points (38 percent) in the year of a birth and continues to impact participation for eleven years after a birth. This suggests that PFL offers public benefits of increasing the skilled labor force.