Tackling the Mom Tax: Effects of State Paid Family Leave Laws on Leave Use and Female Labor Market Outcomes

Abstract

Paid family leave mandates have spread from one state in 2008 to nine states (including D.C.) in 2023. These mandates reduce the cost of taking maternity and paternity leave, increasing leave use among parents covered by the mandates. Convex pay structures, which penalize mothers’ incomes disproportionately to the longer leaves they take and the fewer hours they work, may interact with behavioral changes of parents caused by paid family leave to produce favorable market outcomes for mothers. Paid family leave affects labor market outcomes of parents by incentivizing time off work and potentially changing the division of child-rearing responsibilities. I use March Current Population Survey data from 2003-2005 and 2021-2023, along with difference-in-difference and fixed effects approaches, to test the effects of paid family leave on the behavior and labor market outcomes of American parents. I find increases in the length of leaves taken by fathers and mothers, increases in hours worked by the mothers of young children, and evidence of positive labor market outcomes for women in general (higher wage incomes, higher employment rates, and higher labor force participation rates).