The Value of Postponing Pregnancy: California’s Paid Family Leave and the Timing of Pregnancies

Conditioning a monetary benefit on individuals’ family status can create distortions, even in individuals’ seemingly personal decisions, such as the birth of a child. Birth timing and its response to various policies has been studied by economists in several papers. However, pregnancy timing – i.e. the timing of conception – and its response to policy announcements has not been examined. This paper makes use of a 21-month lag between announcing California’s introduction of the first paid parental leave program in the United States and its scheduled implementation to evaluate whether women timed their pregnancies in order to be eligible for the expected benefit. Using natality data, documenting all births in the United States, a difference-in-differences approach compares California births to births in states outside of California before the program’s introduction and in 2004, the year California introduced paid parental leave. The results show that the distribution of California births in 2004 significantly shifted from the first half of the year to the second half of the year, immediately after the program’s implementation. While the effect is present for all population segments of new mothers, it is largest for disadvantaged mothers – with lower education levels, of Hispanic origin, younger, and not married. These results shed light on the population segments most affected by the introduction of paid parental leave and on the equitable nature of paid parental leave policies.