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Who benefits from paid family leave? Impact of expansions in Canadian paid family leave on maternal employment and transfer income

Abstract

This paper estimates the impact of a recent expansion in Canadian paid family leave from 25 to 50 weeks on maternal employment and transfer income. It finds the expansion coincided with increases in transfers to mothers of children age zero to one relative to mothers of children age three to four, and with decreases in returns to work in the year after birth. These changes were concentrated among economically advantaged groups of women, defined by marital status, education, and non-wage income. Despite these changes, there was no evidence of a decrease in returns to work or relative employment for mothers of children age one.

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Notes

  1. On average, social assistance phased out at $9,600 of unearned income for a single parent with one child and $12,000 for a two parent family with two children. The federal child tax credit consists of two parts: a supplemental benefit that phased out from $22,000 to $33,000 and a basic benefit that phased out from $33,000 to $77,000. Most provincial child allowances phased out from $21,000 to $25,000 (Jenson 2003; National Council of Welfare 2002).

  2. Schönberg and Ludstec (2007) found that when German paid leave expanded from 6 to 10 months, the share of women returning to work by month 7 decreased by 25 to 26 percentage points (56–58%). In Austria, Lalive and Zweimüller (2005) found that expansions from 12 to 24 months led to approximately a 23 percentage point (55%) decrease in the returns to work in month 12. Estimates from Austrian study based on author estimates from Fig. 7 of paper.

  3. Unfortunately, most current comparative research on child and family benefit packages such as OECD (2006) and Bradshaw and Mayhew (2006) do not explicitly address interactions with family leave payments (Kershaw 2007). However, the OECD (2006) study indicated that eight countries (Austria, Germany, Iceland, Ireland, Luxembourg, Netherlands, Spain, and the UK) explicitly disregard child benefits and family allowances in determining social assistance and means-tested housing benefits, while four other countries (Finland, Norway, Denmark, and Sweden) did not do so. Other countries, such as France, exempted the first 4 months, and not the remaining 28 months of their “young child allowance”, from income under their guaranteed minimum income program.

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Acknowledgements

Please send correspondence to Maria Hanratty. This paper was supported by a grant from the Canadian Embassy and the Statistics Canada Microdata Research Data Center Program. The research and analysis are based on data from Statistics Canada and the opinions expressed do not represent the views of Statistics Canada. The authors would like to thank three anonymous referees for their helpful comments and suggestions.

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Correspondence to Maria Hanratty.

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Responsible editor: Deborah Cobb-Clark

Appendix

Appendix

Fig. 3
figure 3

NLSCY sample design, time-to-work analysis

Table 5 Proportional hazard model for months until mother returns to work, economic and demographic controls
Table 6 Proportional hazard model for months until mother returns to work: baseline hazard parameters

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Hanratty, M., Trzcinski, E. Who benefits from paid family leave? Impact of expansions in Canadian paid family leave on maternal employment and transfer income. J Popul Econ 22, 693–711 (2009). https://doi.org/10.1007/s00148-008-0211-x

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Keywords

  • Canada
  • Family leave

JEL Classification

  • J160
  • J180
  • J220