Paid maternity leaves are regressive

Quite a few countries guarantee paid leaves for new mothers that not only allow them to get back the same job they left, but also gives them the financial wiggle-room to well take care of their new offspring. This time at home without worries is good both for the mother and the child, although one can suspect that this time off work can have adverse implication on human capital and the future career path for the mother. Paid maternity leaves are also often promoted as a way to conduct social policy across all social strata, as they apply to everyone.

Not so fast, say Gordon Dahl, Katrin Løken, Magne Mogstad and Kari Vea Salvanes. They look at Norwegian data, where the paid leave was increased from 18 to 35 weeks between 1987 and 1992. As it did not crowd out unpaid leave and expanded the time spent at home for the mothers, we should see some positive effects on child development in the country. None of that seems to have happened, not even on parental earnings, labor market participation, fertility, marriage and divorce. So it seems to be a rather useless reform. Worse, this expansion redistributed resources the wrong way. Indeed, in the absence of crowding out unpaid leaves, the reform corresponds to a pure leisure transfer to upper and middle income families (lower income families tend to have fewer working mothers in Norway). The reform is thus regressive. And we have not mentioned that there are obvious costs to someone for paying mothers while they do not work.