Association for Public Policy Analysis & Management

In 2018, less than 20 percent of U.S. workers had access to paid family leave (PFL) during periods spent caring for a new child resulting in $20.8 billion in lost wages. A growing body of literature explores whether PFL mitigates costs associated with caregiving. Existing research exploits state policy changes to identify the causal impact of access to PFL on leave taking behavior (i.e. use and duration) and its subsequent impact on labor market outcomes (e.g. labor force participation, hours worked, and earnings). Evidence from early adopters of PFL, California and New Jersey, suggests that the policy enhances labor market attachment of parents. Less is known about medium term impact of PFL on the nature of labor market arrangements and how they may differ across racial/ethnic lines. Using Current Population Survey (CPS), we exploit the introduction of family leave insurance programs in California (2004) and New Jersey (2009) to identify the causal impact of PFL on the career trajectory of male and female U.S. workers up to four years post child birth. The following outcomes are examined: labor force participation, employment, part-time employment, job tenure, management occupation, poverty status, wage rate, and spousal earnings gap. We combine an event study and difference-in-differences model to estimate the effect of PFL and find that it increased the labor force participation of non-Hispanic, white women.