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February 04, 2018

Parental leave policies as good HR practices

Opinion image

Two significant challenges that HR department officers and managers encounter are how to recruit the best workers and how to maintain human capital within their firms. In many countries, women with children fall behind comparable men in terms of career prospects and wages. Employment rates of women are still lower than those of men and are lowest for mothers. One reason is that mothers do not return to their previous jobs after having their children.

Parental leave policies are generally regarded as important tools for increasing maternal employment and improving work–family balance—that is, time spent by parents at work versus time spent with their families. A justification for such policies is that parental leave protects workers from losing their jobs. The extension of available parental leave periods has increased the actual duration of leave that women take. Firms and workers benefit because the likelihood that workers return to the same employer after parental leave is higher if the leave period is longer, but not too long (i.e. not more than one year). The introduction of parental leave quotas for fathers has also helped create incentives for employers to grant paternal leave, and for fathers to take it. In Norway and Sweden, virtually all fathers take some paternity leave, at least ten weeks. 

Some research provides caveats about parental leave policies. There is evidence that entitlement to prolonged leave negatively affects employment rates and wages. (Too) long leave times reduce the likelihood that workers return to the same employer. Career interruptions due to parental leave can also lead to detachment from work and depreciation of human capital, especially with longer leave durations. It remains a question whether this explains why women are highly underrepresented in top management jobs (less than 5% of CEOs in OECD countries are female), and in academic positions. Some studies have shown that losses in terms of wages and human capital depreciation from parental leave are higher for the highly educated than for low- or medium-educated people. A concern, suggested by some randomized studies, is that discriminatory behavior against women and mothers exists in labor markets, particularly in recruitment. Parental leave policies represent one potential explanatory factor, but unconscious biases related to women and parental leave may also be generating these outcomes. 

Career costs accrue throughout parental leave and vary across educational levels. Both governments and firms should take notice of these costs and should establish policies and practices to help reduce them during periods of leave, providing incentives for women to return to work early. Women may self-select out of high-productivity jobs if they anticipate that it will be difficult to combine family responsibilities with high work demands. Women who want to return to work within the same firm may benefit from active mentoring programs—programs that help optimize the timing of return and create opportunities to return earlier. If the match between workers’ skills and job tasks is improved after returning from parental leave, women’s career paths may catch up to other employees’ more quickly. Such policies are not necessarily costly to firms; indeed, firms can actually benefit from retaining the best workers, while returning mothers will have more opportunity to recover the human capital and job-specific skills they may have lost during parental leave.

© Astrid Kunze

Read Astrid Kunze's full article, “Parental leave and maternal labor supply

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