A pure leisure transfer to the well-off - Abbott and parental leave

Some new opposition fodder for the debate soon to come on Prime Minister Tony Abbott’s generous paid parental leave scheme is provided by a report just published by the US government’s National Bureau of Economic Research. New research conducted jointly by economics professors in the UK, US, and Norway assessed the case for paid maternity leave, focusing on parents’ responses to a series of policy reforms in Norway that expanded paid leave from 18 to 35 weeks (without changing the length of job protection).

The summary of What Is the Case for Paid Maternity Leave? (the full paper is behind a paywall) says the more leave allowed, the more time mothers spent at home without a reduction in family income.

The second set of empirical results revealed the expansions had little effect on a wide variety of outcomes, including children’s school outcomes, parental earnings and participation in the labor market in the short or long run, completed fertility, marriage or divorce. Not only was there no evidence that each expansion in isolation had economically significant effects, but this null result held even if estimates across all expansions from 18 to 35 weeks were cumulated.

“Our third finding is that paid maternity leave is regressive in the sense that eligible mothers have higher family incomes compared to ineligible mothers or childless individuals. Within the group of eligibles, the program also pays higher amounts to mothers in wealthier families. Since there was no crowd out of unpaid leave, the extra leave benefits amounted to a pure leisure transfer, primarily to middle and upper income families.”