A Family Leave Length Trade-off? Women’s Labour Force Status in Comparative Perspective

Abstract: A frequently cited aim of parental leave policies is to provide parents with the opportunity to combine work and family. The availability of additional childcare leaves prolongs mothers’ time out of the labour market, however, and thus may counteract women’s labour market participation. This study is the first to differentiate between the whole range of labour force status outcomes: employment, unemployment and inactivity. Using data for 20 countries from the Luxembourg Income Study, this study examines the relationship between paid family leave length and mothers’ labour market status. Calling on multinomial logistic regression with country fixed effects, this study finds that the provision of comparatively long paid family leave is associated with increased unemployment risks among mothers of 0 to 15-year olds. A slight peak when children are 4 to 6 years old and when leave is longer than two years suggests that mothers are most vulnerable when they re-enter the labour market after a longer leave. These results are in line with prominent theories of human capital depreciation, signalling or statistical discrimination. Leaves of over one year, on the other hand, are associated with reduced inactivity amongst mothers. Hence, results indicate a trade-off when it comes to leave length. Shorter leaves are associated with mothers dropping out of the labour market, especially when children are young, while longer family leaves are associated with increased unemployment risks.