The Impact of Paid Parental Leave on Fertility Intentions

Abstract:

Paid parental leave is an important part of family policy in OECD countries. Australia’s Paid Parental Leave scheme was introduced in 2011 and provides 18 weeks of leave paid at the full‐time minimum wage for the primary carer of a child. We estimate the effect of access to paid parental leave on women’s fertility intentions by exploiting the differential impact of the scheme for women working in the public and private sectors. We find that the scheme’s announcement had no impact on fertility intentions at the extensive margin but that, conditional on intending to have at least one (more) child, the number of children intended increases by 0.34, a 16 per cent increase. This effect is concentrated among highly educated women. As it has been shown that fertility intentions predict fertility outcomes, these results suggest that even modest paid parental leave programs can increase the fertility of working women and so moderate the declines in fertility rates seen in many developed countries.