Media Briefings

PAID PARENTAL LEAVE AND CHILDREN’S COGNITIVE DEVELOPMENT

  • Published Date: February 2018

Prolonged paid parental leave and the opportunity it provides for mothers to spend more time with their offspring can have long lasting effects on children’s cognitive development and educational outcomes. But the size and direction of the effect depend strongly on mothers’ background and whether their children are boys or girls. That is the central conclusion of research by Natalia Danzer and Victor Lavy, published in the February 2018 issue of the Economic Journal.

Analysing the impact of an Austrian reform that extended paid parental leave from one to two years, their study finds that the children (and particularly the sons) of highly educated mothers benefited significantly in terms of their later test scores at school. But the educational outcomes of children of mothers with lower educational attainment seem to have been harmed.

The researchers note that the provision of parental leave has become a prominent instrument of family policy and is subject to continuing adjustments and extensions across countries. Among OECD countries, the average duration of paid parental leave for mothers has increased from 17 weeks in 1970 to over one year in 2015.

In 2015, one third of all OECD countries and about half of all European Union countries granted paid leave to mothers of 12 months or more. In contrast, the state of New York introduced an eight-week paid family entitlement only on 1 January 2018.

Parental leave schemes strongly influence the time that new mothers stay at home with their children before returning to work. The question of whether the duration of maternal time at home affects children’s development in the long run and whether this holds across different subgroups of the population are at the heart of this new study.

In particular, the research provides the first results on how one of the most generous parental leave reforms affected the cognitive development of children. The reform came into effect in Austria on 1 July 1990 and extended the maximum duration of paid and job-protected parental leave for working mothers from one to two years.

Take-up rates were very high and most mothers took leave for the full duration of two years. But as previous studies have shown, despite the longer parental leave, mothers did not experience any detriment to their medium- or long-run employment and earnings.

To assess the effect of this 12-month parental leave extension on the cognitive skills of affected children, the study analyses Austrian data from the Programme for International Student Assessment (PISA). PISA collects standardised test scores in mathematics, reading and scientific literacy for a representative sample of students at age 15.

Comparing the standardised test scores of children born under the prolonged parental leave regime with those of children whose mothers had to return to work within 12 months, the research reveals that:

• On average, the effect of the parental leave extension on test scores is close to zero and statistically insignificant. This is in line with most previous evaluations of parental leave, which consider much shorter extensions in other countries.

• But the average effect of zero hides important differences in the effect across population subgroups. The duration of parental leave and maternal time at home seem to have differential effects depending on maternal educational background and child gender.

• While the test scores of the children (especially the son) of highly educated mothers improved significantly following the parental leave extension, the schooling outcomes of children of mothers with lower educational attainment seem to have been harmed.

Given that formal childcare for very young children was very rare at the time of the Austrian reform, these results carry important policy implications for countries in which mothers can only rely on informal care arrangements for their children while at work.

To what extent such negative effects can be mitigated or reversed through a high-quality formal day-care system is an open question.

ENDS


Notes for editors: ‘Paid Parental Leave and Children’s Schooling Outcomes’ by Natalia Danzer and Victor Lavy is published in the February 2018 issue of the Economic Journal.

Natalia Danzer is at the Ifo Institute. Victor Lavy is at the University of Warwick.

For further information: contact Natalia Danzer on +49(0)89/9224-1252
(email: danzer@ifo.de); Victor Lavy via email: V.Lavy@warwick.ac.uk; or Romesh Vaitilingam on +44-7768-661095 (email: romesh@vaitilingam.com; Twitter: @econromesh).