The Intergenerational Effects of Parental Leave: Exploiting Forty Years of U.S. Policy Variation
Abstract: While job-protected leave (JPL) is part of the family policy strategies of all developed nations, its marginal contribution to policy objectives is not well understood.
Combining over four decades of survey data with JPL policy variation in 18 U.S. states, we present the first assessment of the impact of leave policies on intergenerational mobility on education and earnings, and we also study other effects of the policy in both generations, parents and children. JPL policies increased intergenerational mobility in education and improved children’s long-term educational outcomes and wages. The mobility gains follow from stronger effects on children from mothers with fewer years of education. Additionally, JPL policies increased the motherhood penalty, increased housework activities such as caregiving for children, increased the likelihood of childcare expenses,
Life-Cycle Fertility, Human Capital, and Family Polices: A Discrete-Continuous Choice Framework*
Abstract: We combine vast quasi-experimental variation in leave and tax-transfer policies in the US between 1968-2017 with a dynamic, discrete-continuous choice framework to study how these policies affect women’s labor market decisions and outcomes, fertility decisions, and tax revenue. Crucially, we incorporate the trade-off between leisure, work, and child-rearing time, and integrate the multiple dimensions of leave policies (work requirements, length, job-protection, reimbursement) and tax-transfer policies (welfare transfers, family allowances, marginal tax rate, progressivity, marriage benefits). We show identification and develop a corresponding three-stage estimation strategy that combines the policy variation with a long panel of individual data. The variation in policy over time and across states is key to our identification, estimation, and counterfactual evaluation of the national implementation of policies. Our results reveal a policy tradeoff between policies that best foster fertility (family allowances) and those that best foster labor market outcomes (leave policies). However, the opposing effects of these policies on fertility and labor market outcomes can be balanced while increasing tax revenue.
Labor Supply and the Extensive Margin
Forty years ago the French and British used to
work more than the Americans. They now work
less. The aim of this paper is to provide a coherent
picture of these changes. To do so we split
the overall level of work activity into the number
of individuals in work and the intensity of work
supplied by those in work. This reflects the distinction
between whether to work and how much
to work at the individual level. This is referred to,
respectively, as the extensive and intensive margin
of labor supply.
The difference between the extensive and
intensive margins has been highlighted in
recent research attempting to resolve differences
between micro and macro responses
of labor supply to tax reform. For example,
Richard Rogerson and Johanna Wallenius
(2009), following the work of Edward C.
Prescott (2004), argue that the responsiveness
of the extensive margin of labor supply
to taxation plays a major role in explaining
aggregate differences in total hours worked
across countries. They show that an economy
with fixed technology costs for firms and an
inverted U-shape life-cycle productivity for
workers can produce large aggregate extensive
labor supply responses driven by movements
in employment at either end of the working
life. This, they argue, can reconcile the small
micro-based elasticities of hours worked with
the large responses required if taxes and social
security are to explain cross-country differences
in total hours of work.
The distinction between the extensive and
intensive margin has long been recognized
in microeconometric studies of labor supply,
especially for women with children (James J.
Heckman 1974; Blundell and Thomas Macurdy
1999), and in studies of older workers
(Jonathan