The economic case against extended maternity leave

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The priceless moments take a chunk out of GDP.
The priceless moments take a chunk out of GDP.
Image: AP Photo/Jack Dempsey

Time off with a new baby is sweet and so valuable for the family, but does it benefit society too?

Not nearly as much as some proponents suggest—and especially not if mothers take longer maternity leaves, according to new research conducted jointly by economics professors in the UK, US, and Norway. A paid leave of 35 weeks had no more benefits to children’s welfare, the economy, or workforce continuity than a shorter one.

Extra leave and other benefits amount to “a pure leisure transfer,” according to the paper just released by the National Bureau of Economic Research.

That characterization could be controversial. The US is the only one of the OECD countries not to offer paid parental leave, and parenting advocates have long cited the policy as antiquated and responsible for keeping women out of the workplace.

The new research is based on Norway, which adopted paid parental leave in 1977 and expanded it since then from 18 weeks to 35 weeks. Women receive 100% of their income paid by the government and (as is the case in many countries) are guaranteed a return to the same or similar work.

The first countries to introduce paid maternity leave, in the 1960s or earlier, were Austria, the Czech Republic, Italy and Poland, and it has spread to more than 120 countries. Still, a few—Austria, the Czech Republic and Germany—have scaled back (pdf), partly by offering an option with a higher payment for a shorter leave.

The research supports that decision. In effect, it argues that enough is enough: Women don’t need extra months or a year off with pay to breastfeed and bond with baby.

“Even modest expansions, from 18 week to 20 weeks, or from 20 to 22 weeks, have no significant effect on outcomes” like higher academic achievement, mothers’ returns to work or in future income or tax payments, the authors write.

Extra paid time off for new mothers cost taxpayers a bundle and also bring down the country’s “economic efficiency,” according to the researchers—all professors of economics from the University of Oslo, University of Bergen, University College London and the University of California San Diego.

One extra week of paid leave by a new mother cost Norway’s taxpayers $687 in 2010 dollars—and 35 weeks off for all eligible moms costs the country an estimated $1 billion overall, or 0.5% of its GDP.

Their findings are important given the tight budget realities many countries face as they consider whether to expand or restrict paid leaves or fund other programs like early childhood education, the researchers say.

Others say the findings are true but cannot be taken as an absolute. The economists may have “oversimplified it a bit,” says Ann O’Leary, director of the Children and Families Program at the Center for the Next Generation in California. But she largely agrees: There’s not a lot to be gained from a much longer leave. An optimal time off with baby might be three to six months, she said, in part because of the health benefits of breast feeding full time, well baby visits, maternal health and more.

In some parts of Europe, the cost of family leave payments is paid through a tax on workers or their employers, not out of general revenues, says O’Leary.

And other research does show a correlation between longer maternity leaves and mothers’ likelihood of returning to work. Leaves under two years long “have a positive, albeit small, influence on female employment rates and on the gender ratio of employment,” two OECD researchers wrote in January.

Paid leaves increase family financial stability, and moms who receive them are much more likely to be working—and less likely to need food stamps when their child turns 1, according to Rutgers University/National Partnership for Women & Families research.

The new research shows, though, that paid leaves in Norway go to women of higher education and wealth. Lower-income women often aren’t eligible—so the debate over long or short paid maternity leaves leaves them out entirely.