The Effect of Maternity Leave Expansions on Children’s Long-term Outcomes in Finland

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Title: The Effect of Maternity Leave Expansions on Children’s Long-term Outcomes in Finland
Author: Jokinen, Miska
Contributor: University of Helsinki, Faculty of Social Sciences, Department of Political and Economic Studies
Publisher: Helsingin yliopisto
Date: 2018
Language: eng
Thesis level: master's thesis
Discipline: Taloustiede
Abstract: Abstract Governments throughout the world have responded to soaring women’s labor force participation rates by implementing federally funded parental leave programs. Justification for these programs often lies in the assumption that the time the parents and the child spend together after the childbirth is beneficial for both. Extensive literature on the effects of maternity leave expansions’ effects on the mothers’ labor market outcomes exists but the possible effects on children have gained less attention. In this study, the effects of a maternity leave expansion on children’s long-term outcomes are empirically evaluated in the Finnish context. Outcomes regarding income and educational attainment are assessed. In Finland in 1974 a bill was signed that increased the duration of paid maternity leave from 72 to 174 weekdays. Every Finnish biological mother that had given birth after May 1st was entitled to the increase. The way this major reform was implemented allows us to exploit the discontinuity in the policy change and use quasi-experimental methods to estimate the causal effects of the change. Because the reform was announced in the public almost two months after May, it would have been impossible to time the childbirth so that the assumptions of the identification strategy would be violated. In addition, data from children born between 1973 and 1976 is used to isolate the possible relative age effect from the causal estimates. The dataset used in this study consists of 35 360 individual observations on Finnish people born in April and May between 1973 and 1976. This thesis sheds light on a topic that has not been empirically studied in Finland before. According to the results of this study, children who were born right after the reform earn almost 5 percentage points more than the children who were born just before the reform. The difference in income is driven mostly by the male population. On the contrary, the effects on educational attainment are very little or non-existent. The empirical findings of this thesis are well in line with the existing literature on the topic.
Subject: parental leave

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