The economic impact of taking short parental leave: Evaluation of a French reform

Abstract

There is a growing debate in Europe about whether parental leave should be short or long. The paper evaluates the impact of short parental leave on mothers' employment status and subsequent wages, with a special focus on the part-time parental leave option. It exploits a policy reform that took place in 2004 in France and increased the incentive to prolong the maternity leave after the first birth by six months paid parental leave. Data from the fourth round of the “Generation 98 survey” (CEREQ) and both difference-in-differences and propensity score matching approaches are used to estimate the effect of the reform. The results show that full-time short paid parental leave had almost no effect on labour market participation and wages of first mothers at the global level. However, for part-time paid leave takers, the reform increases the employment rate but decreases the subsequent wages. The wages remain lower two years after child birth, especially for the most educated, who mainly choose the part-time option.