Association for Public Policy Analysis & Management

Maternity Leave Legislation allows women to take time off from employment immediately before and after childbirth with income replacement. Since 1975, the United Kingdom (UK) has seen several changes to its maternity leave policy (MLP). Duration of job-protected leave, statutory maternity pay (paid by the employer), maternity allowance have each increased over time. In this study, we focus on the 1994 policy change in paid leave that removed eligibility restrictions, allowing job-protected leave to all pregnant women regardless of hours of work, effectively removing barriers to accessing a significant work-family reconciliation policy for a large number of women. Prior research on long term trends in employment and wage gaps of married women with children compared to married women without children in the UK, corresponding to changes in government policies pertaining to maternity leave, taxation, childcare and welfare, finds evidence of increases in employment and wages over time. Our study builds on and extends prior research by including both married and unmarried mothers, women of childbearing age and by isolating the effects of the 1994 policy change.

We use micro-data from the General Household Survey, for three years prior to the policy change, 1991-1993, and two years post-change, 1995-1996, and implement a difference in difference research design to identify the effects of policy change.  We focus on two outcomes: employment status: full-time employment, part-time employment, or unemployed; and constant weekly earnings. We compare the outcomes of working mothers (“takers”) or childbearing age women (“potential takers”) to the outcomes of women of working age who are not of fertile age (45-65).

Results show there is a six-percentage point difference in the probabilities of being employed full-time between the new mothers and the control group post-policy.  The analysis of potential takers of the policy also shows an increase in the probability of being employed by four percentage points between the treatment and the control groups post policy. Lower probabilities of being unemployed are observed for both treatment groups, when compared to their respective control groups, post policy. Women with children (directly affected by the policy) showed a less-than 1% decrease in earnings, and potential takers of the policy showed a 4% decrease, but results are not statistically significant.

In summary, we observe that removing barriers for women to access maternity leave has a slight negative effect on wages within two years of childbirth, but an increase in the probability of being employed, for women of childbearing age and for new mothers. Contrary to the belief that making maternity leave easily available to women will be detrimental to their employment trajectories, results indicate that such policies can potentially improve their economic wellbeing, through their positive effect on women’s employment. Further, women’s improved attachment to the labor market is expected to have positive implications for their wages long term, and for their employers.