The International Regulation Of Maternity Leave: Leave Duration, Predictability, And Employer-Co-financed Maternity Pay

Abstract

Provisions for maternity leave are common among industrialized countries, but their institutional design varies distinctly from country to country. In this paper we analyze the costs of maternity leave legislation in the US, Germany, Denmark and the UK by comparing the legal provisions on leave durations and on employer-co-financed maternity pay. We argue that the costs of re-organization in response to maternity leave will not simply increase with its duration, but will instead be hump-shaped displaying a maximum at medium-leave durations. More than its expected duration, however, the predictability of leave duration will influence the costs of re-organization. Employer co-financed maternity pay further adds to these costs. Following our theoretical analysis, we review the existing empirical literature on maternity leave: While existing surveys among employers and working mothers are in line with our theoretical considerations, the mixed evidence presented in the existing econometric studies concerning the effect of leave duration on female wages and labor force participation may result from having excluded the issue of predictability of leave duration as well as the question of co-financed maternity pay. We close with (tentative) conclusions for the design of maternity leave provisions, which are currently being discussed and revised in many countries around the world.