07/08/2023

NORTHERN IRELAND RESEARCH PROJECT: IMPACT OF PARENTAL LEAVE POLICIES ON LABOUR MARKET (24 July 2023) 

Queen’s University has recently published its  Research Findings assessing the impact of Parental Leave policies on different labour market outcomes for men and women following the completion of 12 consequential waves of research using the UK longitudinal study (201-2021).

The research was commissioned by the Department of Economics against a backdrop of an ageing population and a declining replacement level (the overall fertility rate required for a country’s population to exactly replace itself from one generation to the next) and the impact of this, from an economic perspective, for a country to meet the growing demands of his older population.

The increasing economic activity and employment rates for women in the last half a century has resulted in women having less children, or having children older, and has created a tension between labour market participation and childbearing, with Northern Ireland (and the UK) where gendered parenting norms prevail.

Parental Leave Policies are therefore of significant importance in trying to reconcile this tension and maintain and increase female participation in the workplace, whilst at the same time ensure the replacement level does not exponentially decline.

The aim of the research was to assess the relationship between parental leave and key demographic characteristics and labour market outcomes.

The research investigated three main issues namely:

1. Main determinants of taking Parental Leave and its duration.

2. What influences the decision to switch to part-time employment as a coping strategy to combine work and family responsibilities.

3. How taking Parental Leave impacts on wages.

FINDINGS INCLUDE: 

Unsurprisingly, the findings support much of the existing empirical literature.

1. Main determinants of taking Parental Leave and its duration:

Married parents are more likely to take Parental Leave than single parents with parents in government job or the NHS more likely to take it than those working in private sector companies. This is most likely to be because of enhanced occupational parental leave policies and financial dependability with married couples as well as the perception that taking parental leave is less likely to have an impact on career progression in public sector employment than in the private sector.

Pay, unsurprisingly, was found to have a direct impact on the taking of leave, with higher pay resulting in shorter periods of time off. Higher pay creates the incentive to return to work sooner after childbirth as the impact of reduced pay is more likely to have a greater impact than those with lower earnings.  For women, higher pay also acts to reduce likelihood they will extend maternity leave beyond the paid period of 39 weeks.

The effect of pay on taking leave, is stronger for men than women, perhaps suggesting men are more likely to take parental leave when have higher pay & career stability, whereas this doesn’t seem to apply for women.

2. Women are more likely to go Part Time than men.

Again, reflecting both the anecdotal and statistical research within recent time, the study found that part time work is a common strategy that mothers use to facilitate work with childcare and feeds into the calls for a dedicated childcare strategy for the region.

The data also indicated that older mothers are less likely to switch from Full to Part time employment after a period of leave, as are mothers with higher pay. This is most likely because women with greater financial resources can pay for childcare to return to work on a full-time basis.

This again reinforces the much-debated issue that the lack of affordable childcare acts as a barrier for lower-earning and younger mothers to return to full-time.

Given that part-time employment negatively impacts or ‘scars’ women future career progression and labour market outcomes, this has implications for both the gender pay gap and the pay gap between mothers who do return to work full-time and those who don’t.

3. How Parental Leave impacts wages

Finally, the research explored what impact, if any, the taking of parental leave had on wages and whether the duration of the leave also played a part.

For mothers, it found that the wage penalty of taking parental leave is only evidenced for mothers who take more than 39 weeks leave. Previous studies found that that periods of short or moderate leave have no effect on female earnings, but lengthier leaves are associated with substantial wage reductions.

CONCLUSION 

Northern Irish economy faces persistently high levels of economic inactivity, and female employment is lower compared to the rest of the UK. 

There are strong arguments in favour of parental leave policies: proponents will argue that parental leave can promote healthier children, improve the position of women in the workplace, help households address the increasing conflict between work and family, and promote within-family gender equality in terms of labour market attachment. Support for parental leave will also feed into the governments key policy considerations for addressing the declining population level.

The key component in achieving a greater uptake in parental leave is designing it in way as to not detrimentally affect mothers’ labour market outcomes after leave has ended.

Overall, it finds of fundamental importance to the success of parental leave polices is generosity (financially) and length so that it can achieve the social and economic goals.

The Research also recommends that future research on effect of Shared Parental Leave.