Does Maternity Leave Induce Births?

• Author: Averett, Susan L.
• Position: Statistical Data Included

Susan L. Averett [*]

Leslie A. Whittington [+]

Alleviating the tension between the conflicting responsibilities women may face as mothers and as workers is a topic of current policy interest. Expansion of guaranteed maternity leave to all employed women in the United States is suggested as one possible "family-friendly" solution. Controversy surrounding the issue of increased maternity leave centers around the potential cost to firms of widespread access to leave. One specific concern is that the availability of maternity leave will actually increase births among eligible working women. In this paper we use data from the National Longitudinal Survey of Youth to examine the impact of maternity leave on fertility. We explore two possible routes through which maternity leave may influence fertility. We first estimate the impact of desired fertility on the probability of being in a job offering maternity leave. We then estimate the impact of maternity leave and desired fertility on the probability of a birth. We find no evidence that women sort by fertility d esires into firms on the basis of their maternity leave policy. We do find that the probability of a birth increases as a result of maternity leave, and that the fertility effect of maternity leave increases with birth parity.

1. Introduction

   The dramatic increase in U.S. female labor force participation in the past three decades has generated concern about the delicate balance between family and job that many women must achieve. In 1960, the labor force participation rate of all women in the United States was 37.7%. Thirty years later, the labor force participation rate of women reached 57.4%. Of perhaps even more policy interest is the fact that the participation rate of women in their prime childbearing years was actually higher than the overall female labor force participation rate by 1990. The labor force participation rates of mothers with preschool children have been rising steeply for several decades (Kamerman and Kahn 1991; Klerman and Leibowitz 1994; Olsen 1994). As a result of these trends there has been increased policy attention on how firms can accommodate the needs of women for both leave time after childbirth and stable job status. Public debate ultimately led to the adoption of the federal Family and Medical Leave Act (FMLA) in 19 93. Some firms did offer maternity leave (largely unpaid) before the passage of the FMLA, but in the United States it has generally been a benefit offered only to employees at large firms that pay relatively high wages or at government agencies (Kamerman and Kahn 1997). [1] The FMLA guarantees 12 weeks of unpaid parental (meaning both women and men are eligible) leave to most employees of relatively large firms. This offers substantial job protection to some parents after the birth of their children. It is, however, estimated that this legislation will only pertain to about half of U.S. workers because of coverage limitations, primarily because only firms employing over 50 persons are required to comply (Joesch 1995). Further, no firms are required by law to offer paid parental leave. [2]

   The expansion of parental leave laws to provide coverage for all workers and the requirement that such leaves be compensated remain issues of national debate. Advocates emphasize that the United States is the only industrialized country that does not guarantee paid maternity leave (Kamerman and Kahn 1991). Critics argue that expanded leave will result in higher costs for employers as they have to hire replacement workers or deal with greater employee absenteeism. [3] Another cost concern is that women will be induced to have more births because maternity leave lowers the cost of a child, and that this increased fertility will exacerbate the financial burden on firms.

   This final issue is the focus of this paper: Does employer-provided maternity leave affect fertility decisions of women in the United States? There is a growing literature exploring the impact of maternity leave on labor supply patterns and earnings in the United States (Waldfogel 1996, 1997; Klerman and Leibowitz 1997, 1998; Ruhm 1998). To date, however, no work specifically estimates the impact of maternity leave on births among U.S. women, although Winegarden and Bracy (1995) include aggregate U.S. data in a cross-national study on the topic.[4]

   The impact of fertility incentives inherent in other U.S. policy vehicles has been previously explored. There is, for example, a large body of work exploring the relationship between Aid to Families with Dependent Children and childbearing (Moffitt 1992; Argys and Rees 1996; Robins and Fronstin 1996). Previous research has explored the role of tax exemptions for children (Whittington, Alm, and Peters 1990; Whittington 1992; Zhang, Quan, and Van Meerbergen 1994) and Medicaid benefits (Yelowitz 1994) on fertility, and both lines of work find that these policies have statistically significant, albeit small, effects on births. There is increasing empirical evidence supporting the theoretical supposition that economic policy can influence fertility, and we expand on this line of research by examining the impact of employer-provided maternity leave on the probability of a birth among working women.

   Understanding the impact of maternity leave policies on fertility is crucial to fully estimating the costs of such programs. In the following section we present a conceptual framework of the relation between fertility and maternity leave, drawing on the standard neoclassical model of fertility. We then discuss the data and estimation strategies that we use, and our estimation results follow. Finally, we present our conclusions.

2. Conceptual Framework and Hypotheses

   We consider two issues facing a firm considering the adoption of a maternity leave: Will the leave policy attract potential female employees most likely to have births? Will the maternity leave policy induce women in the firm to have more births? We hypothesize that the temporal ordering of events among working women is as follows. A woman first selects her job with or without maternity leave as a benefit. Then, she either has a birth or not. Because of the waiting period often required of benefits packages, a woman may be in a position for a year, or more, before having access to maternity benefits. It therefore seems unlikely, though not impossible, that a woman would move to a position with maternity leave because she is already pregnant, although we do recognize and discuss this possibility later.

   Our conceptual outline is based on women who have already chosen to be in the labor market, as these are the only women for whom the maternity leave is currently relevant. The availability of maternity leave guarantees may also determine the probability of a woman participating in the labor force, either through initially attracting her to the labor market or through retention after a birth. We have no way of determining whether an individual woman who is not employed was, in fact, offered a position with maternity leave. Therefore, we cannot ultimately estimate the probability of entering the labor market as a function of being offered maternity leave. We do, however, acknowledge the importance of understanding the first sorting potentially caused by maternity leave--into or out of the labor market--as has already been carefully analyzed by other authors (Walker 1991; Winegarden and Bracy 1995; Klerman and Leibowitz 1998; Ruhm 1998). We necessarily start our analysis at the point where the woman has chosen t o participate in the labor market and look at the subsequent fertility impact.

   An individual's decisions about work, marital status, and fertility are undoubtedly linked. In the analysis that follows, and in our empirical model, we make no attempt to simultaneously model all of these behaviors. Further, although the availability of parental leave is likely very important to some men, we confine our discussion and analysis to the impact of maternity leave on women.

   Choosing Maternity Leave as a Benefit

   Because maternity leave is not a benefit explicitly available with every job or firm, women may seek it out as a particular characteristic of their desired job just as people may search for other job benefits such as flexible schedules, tuition remission, or health insurance. Determining the impact of maternity leave on fertility, therefore, requires recognition of this potential sorting into jobs with maternity leave on the basis of anticipated fertility.

   The probability of a woman having a job with maternity leave ([M.sub.i]) is a function of her desired fertility ([D.sub.i]); economic and social conditions in the area in which she resides (Z); and a vector of personal characteristics affecting her tastes, prices, and income ([P.sub.i]). This can be represented as:

   [M.sub.i] = M([D.sub.i], Z, [P.sub.i]; [u.sub.i]),

   where [u.sub.i] is an error term.

   The impact of desired fertility is theoretically ambiguous. Women who expect to have children and remain attached to the labor market are likely to value maternity leave. Desired fertility will have a positive impact on the probability of these women having maternity leave coverage. Women who do not expect to remain in the labor force postpartum, on the other hand, or who expect to change working conditions by moving to a less stressful, time-consuming, or physically demanding job, may not value maternity leave in their current job. In fact, to the extent that provision of maternity leave replaces other fringe benefits and working conditions or reduces wages, desired fertility may actually have a negative impact on the probability of being in a job with maternity leave. Because of the competing effects, the expected sign of desired fertility on maternity leave-[partial][M.sub.i]/[partial][D.sub.i]--cannot be determined.

   Maternity Leave and the Probability of a Birth

   The probability of a birth can be represented as:

   ...