Take It or Leave It: An Empirical Study of OECD Maternity Leave Policies and Female Labor Market Outcomes

Abstract

I investigate the aggregate-level e ects of maternity leave legislation on female labor market outcomes, namely labor force participation rates, employment-population ratios, and gender wage gaps, in 22 OECD countries for the period between 1960 and 2010. Maternity leave plays an important role in the lives of working women, not only for its social welfare bene ts but in the way it a ects their decision to work, employment, and wages relative to men. The paper extends previous ndings by constructing and applying comprehensive measures of maternity leave policy generosity and studying its e ects, allowing for the comparison of widely varying policy environments, including parental leave. Furthermore, this paper also isolates and studies the e ect of income replacement provisions on female labor market outcomes. The results indicate that in countries with unpaid parental leave, female labor force participation and employment-population ratios increase in line with more generous maternity leave policies, while gender wage gaps narrow. In countries with paid parental leave, however, more generous bene ts are associated with depressed labor supply and employment rates, and wider gender wage gaps. Lastly, near-complete income replacement provisions are demonstrated to narrow the gender wage gap. These implications allow policymakers to anticipate the e ects of maternity leave on female labor market outcomes across di erent policy contexts. Keywords: maternity protection, gender wage gap, employment, labor force participation, women workers