LCC Working Paper Series: 2016-02

Authors

Micaela Bassford and Hayley Fisher

Non-technical Summary

Paid parental leave (PPL) has become an increasingly important component of family policy across OECD countries. Following the implementation of Australia’s statutory PPL scheme in 2011, the United States remains the only OECD country without a national PPL program. Whilst a broad body of literature explores the impact of these policies on female employment, maternal health and child outcomes, much less is known about the impact on female fertility desires and intentions. PPL provides financial support and a link to the workplace following childbirth and so may lead women to intend to have more children than they would otherwise. It has been shown that fertility intentions predict fertility outcomes, and so understanding the link between PPL and fertility intentions important for public policy, particularly given the declining trend in fertility rates observed across developed countries.

In this paper, we estimate the effect that access to any paid parental leave (whether employer or government funded) has on women’s fertility desires and intentions in Australia. Previous studies that estimate the effect of PPL access on fertility have largely examined generous paid leave schemes, with less known about the effects of less generous policies. Australia’s PPL scheme provides 18 weeks of paid leave at the full-time minimum wage, or 41% of the average wage. This paper therefore contributes an estimate of the impact of modest PPL schemes on fertility intentions. Additionally, this paper extends and complements the existing government-commissioned evaluation of the Australian PPL scheme. Our results provide timely and valuable information for current PPL discussions in the United States.

We find that the announcement of the PPL scheme had no impact on whether women do or do not want any children. However, conditional on intending to have children, access to PPL increases the intended number of children by 0.28, a 13% increase. This effect is entirely driven by highly educated women with no existing children. These findings indicate that fertility intentions are influenced by public policy. Coupled with evidence that fertility intentions predict realized fertility outcomes, our results suggest that even a modest PPL scheme such as that implemented in Australia can increase fertility rates among working women, and potentially moderate the declining fertility rates observed in most developed countries.

Published

February 15, 2016