Peer effects in parental leave: Evidence from Italy

In this paper we estimate peer effects in parental leave (PL), analyzing whether mothers’ choices may be influenced by prior decisions made by their female colleagues. We identify peer effects through an exogenous variation in the probability that peers take a PL driven by a reform implemented in Italy in 2015 which extended the time period over which parents can receive a paid PL, providing greater flexibility in its use. We focus on post-reform mothers and exploit the heterogeneity in the share of their peers who, due to their children’s age, have been affected by the reform. Our findings show the existence of important peer effects: a 10 percentage point increase in the share of peers that took a PL in response to the reform results in mothers being 2.4 percentage points more likely to take a PL. We also find a positive effect on the amount of PL taken and a negative effect on the probability of working part-time. As suggested by the heterogeneity analysis, the peer effects seem to be particularly evident for mothers with a low tenure in the firm and in workplaces characterized by strong interactions among the colleagues.