Abstract
Paid leave policy continues to be heatedly debated in the United States, with its potential impact on child development often cited as a reason for support, but with limited empirical evidence. This paper fills this gap by examining the effects of paid maternity leave on children’s long-term educational and employment outcomes. Using the variation in availability of paid leave created by the Pregnancy Discrimination Act of 1978, we find that individuals born after the policy was implemented are more likely to have a college degree at age 26, particularly among black children, a more economically disadvantaged group. However, this has not yet been translated into a significant improvement in employment opportunities in their early career. More importantly, our event study estimates indicate that the beneficial effects decreased rapidly over time and the impacts were more pronounced among the initial cohorts exposed to these effects. The US evidence highlights the potential for such policies to benefit children’s education through increased intra-household specialization and financial resources and increased marital stability.
