Association for Public Policy Analysis & Management

Paid family leave policies are widely championed as a means to facilitate work-life balance, increase parents’ attachment to the labor force and employers, and ultimately help close the gender gap in wage earnings. On the other hand, models of statistical discrimination imply that family leave policies could disproportionately increase the cost of hiring and promoting women, because they are significantly more likely to take advantage of these policies than their male counterparts. Using administrative tax data, we examine the long-term effects of California’s 2004 Paid Family Leave Statute on women’s work and wages. We compare new mothers who gave birth one month before the policy took effect to those who gave birth just after it was implemented. We find that California’s Paid Leave Statute had limited impact on the extensive margin of labor supply in the long-run, but was associated with a statistically significant decrease in wages for mothers with access to paid leave.