The Long-Term Effects of California’s 2004 Paid Family Leave Act on Women’s Careers

From Tyler Cowen.

"It is not obviously a winner policy, at least not from the point of view of boosting women’s labor market opportunities.  In fact it seems to harm them:

This paper uses IRS tax data to evaluate the short- and long-term effects of California’s 2004 Paid Family Leave Act (PFLA) on women’s careers. Our research design exploits the increased availability of paid leave for women giving birth in the third quarter of 2004 (just after PFLA was implemented). These mothers were 18 percentage points more likely to use paid leave but otherwise identical to multiple comparison groups in pre-birth demographic, marital, and work characteristics. We find little evidence that PFLA increased women’s employment, wage earnings, or attachment to employers. For new mothers, taking up PFLA reduced employment by 7 percent and lowered annual wages by 8 percent six to ten years after giving birth. Overall, PFLA tended to reduce the number of children born and, by decreasing mothers’ time at work, increase time spent with children.

That is from a new NBER working paper by Martha J. Bailey, Tanya S. Byker, Elena Patel, and Shanthi Ramnath.  And are you wondering why the number of children falls as a response?  Because the mother ends up staying home with them?  Or do mothers invest more in child quality, thereby lower quantity, as in a Becker model?  In any case a good question."