Do employers’ offers of paid maternity leave increase women’s job satisfaction?

The importance of non-wage compensation like paid maternity leave may vary across workers in that the contribution of paid maternity leave to job satisfaction is more discernible for women of childbearing age than for men and older women. Using data from the National Longitudinal Survey of Youth (NLSY97), this study investigates the relationship between paid maternity leave offers and job satisfaction for women of childbearing age. However, individual-specific preferences for benefits may contribute to job satisfaction and having access to paid maternity leave. This study, therefore, uses an instrumental variable approach to address the presence of endogeneity in the relationship between paid maternity leave and job satisfaction. After instrumenting paid maternity leave variable appropriately, results from the bivariate probit model show that paid maternity leave offers positively contribute to women’s job satisfaction; women with paid maternity leave offers are more likely to be satisfied with their jobs than those with unpaid or no maternity leave offers. Furthermore, the findings remain consistent after conditioning the sample age at and above 24 years and firm size between 20 to 500 employees, respectively.