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The division of parental leave: Empirical evidence and policy design

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  • Høgholm Jørgensen, Thomas
  • Egholt Søgaard, Jakob

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.

Suggested Citation

  • Høgholm Jørgensen, Thomas & Egholt Søgaard, Jakob, 2024. "The division of parental leave: Empirical evidence and policy design," Journal of Public Economics, Elsevier, vol. 238(C).
    • Handle: RePEc:eee:pubeco:v:238:y:2024:i:c:s0047272724001385
    DOI: 10.1016/j.jpubeco.2024.105202
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    More about this item

    Keywords

    Parental leave; Intra-household allocation; Bunching; Policy design;
    All these keywords.

    JEL classification:

    • J13 - Labor and Demographic Economics - - Demographic Economics - - - Fertility; Family Planning; Child Care; Children; Youth
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household
    • C54 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Quantitative Policy Modeling

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