Isabelle Sin, Motu Economic and Public Policy Research - Learning About Leave: Peer Influences in Maternal Leave Decisions

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Melbourne Institute Seminar

Title: Learning About Leave: Peer Influences in Maternal Leave Decisions

Abstract: The months before childbirth are a time of many challenging decisions for a prospective mother. For those in employment, the choice of leave is one such decision. How will a mother decide how much leave to take? One solution is to look to her peers, who have faced similar decisions.

Our study examines how the parental leave decisions of mothers are influenced by parental leave decisions made by their work colleagues (peers) using income tax data on the universe of women who gave birth in New Zealand between 2002 and 2018. Maternal leave in New Zealand replaces 100% of mothers’ income up to a fairly low maximum. We use this maximum threshold to implement a regression kink design, estimating the causal impact of peer leave decisions on mothers’ own leave decisions.

We use Inland Revenue Employer Monthly Schedule data to calculate eligibility for paid parental leave (PPL) and leave duration of recent mothers at the time of childbirth. We then link women to potential peers through their firm of employment and date of childbirth, imposing various restrictions to improve matching. To estimate the causal effect of interest, we regress mothers’ leave duration on that of their peers, instrumented by peer income being above the maximum PPL payment threshold, interacted with the amount above the threshold. Our preferred model indicates that for every week that peers shorten their maternity leave in response to this threshold, mothers reduce their own leave by 0.5 to 0.6 weeks.

Presenter:  Isabelle Sin, Motu Economic and Public Policy Research

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