Care More, Earn Less? The Association between Taking Paid Leave to Care for Sick Children and Wages among Swedish Parents

Abstract

Wages are related to parenthood and to child-related absences from work. The link between leave to care for sick children (CSC) and wages is understudied, however. CSC may negatively influence human capital and work capacity, and send the employer signals about work commitment. The short spells of CSC make this form of leave particularly suitable for testing the signalling theory. This study analysed data from Swedish population registers and showed that CSC use was associated with lower wages, particularly among men, up to 13 years after the birth of the first child. The association was strongest at high wage levels. Self-selection of parents with certain unmeasured characteristics into (high) CSC use was one, but not the only, explanation. The results support the idea that child-related time off negatively influences wages through a signalling effect. In addition, human capital or work capacity may suffer with frequent CSC use.