The division of parental leave: Empirical evidence and policy design

Thomas Høgholm Jørgensen and Jakob Egholt Søgaard

Journal of Public Economics, 2024, vol. 238, issue C

Abstract: We study several key aspects of the design of parental leave systems. First, we estimate parents’ willingness to pay for parental leave using Danish administrative data on the division of leave from almost 190,000 births combined with sharp variation in economic incentives created by the parental leave benefit system. We find evidence of both strong behavioral responses with significant bunching at kink points and a willingness to pay for a gender-traditional allocation of leave, where fathers take little or no leave. Second, we provide a menu of counterfactual policy simulations showing substantial interaction effects between earmarked leave, replacement rates and the duration of leave benefits. Relevant for the implementation of a recent EU directive, a higher replacement rate significantly increases the behavioral response of fathers to earmarked leave. Finally, we discuss the welfare effects of different policies aimed at increasing the parental leave of fathers.

Keywords: Parental leave; Intra-household allocation; Bunching; Policy design (search for similar items in EconPapers)
JEL-codes: C54 H31 J13 J22 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:pubeco:v:238:y:2024:i:c:s0047272724001385

DOI: 10.1016/j.jpubeco.2024.105202

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