Does Maternity Leave Duration Affect Labor Force Participation and Productivity?

Abstract

Given the extensively documented evidence that increases in female labor force participation rate are beneficial for the economy in the long run, a natural question that arises in this context is whether policy changes can affect female labor force participation. In this paper coauthored by Erkmen Giray Aslim, Irina Panovska and M. Anil Tas, the authors explore to what extent maternity leave affects female and male labor force participation, and to what extent changes in duration of maternity leave directly affect productivity. Using narrative evidence that identifies the exact dates when legislative changes to maternity leave policies were enacted and enforced, the authors build a comprehensive maternity leave data for a panel of middle and high-income countries with emerging financial markets. Findings show that maternity leave has positive but limited effects on female labor force participation, but it signi�cantly increases male labor force participation. There is some evidence that increases in maternity leave duration decrease productivity in the short run, but there are no signi�cant adverse effects in the intermediate run. The authors also find evidence of substitutability between male and female workers and strong evidence in favor of a nonlinear relationship between GDP per capita and labor force participation.