The Effect of Paid Maternity Leave on Fertility and Mothers’ Labor Force Participation

Abstract

This study examines how paid maternity leave (ML) impacted fertility and mothers’ labor force participation in Romania. The ML gives mothers the right to paid leave until the child turns one year old, and it offers 65% of monthly income before birth. I examine the effects of this policy change using a regression discontinuity design and census data. I show that mothers who are eligible for ML are 2.5 percentage-points more likely to have an additional child than those ineligible. The effect is persistent for seven years after the policy was implemented. I find no significant results regarding the mother’s labor force participation. These results have important implications regarding the shrinking working-age population and the ability to fund benefits programs.