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In this paper, Bailey and colleagues use IRS tax data to evaluate the short- and long-term effects of California’s 2004 Paid Family Leave Act (PFLA) on women’s careers. Our research design exploits the increased availability of paid leave for women giving birth in the third quarter of 2004 (just after PFLA was implemented). These mothers were 18 percentage points more likely to use paid leave but otherwise identical to multiple comparison groups in pre-birth demographic, marital, and work characteristics. We find little evidence that PFLA increased women’s employment, wage earnings, or attachment to employers. For new mothers, taking up PFLA reduced employment by 7 percent and lowered annual wages by 8 percent six to ten years after giving birth. Overall, PFLA tended to reduce the number of children born and, by decreasing mothers’ time at work, increase time spent with children.

Martha Bailey is a Professor in the Department of Economics and a Research Professor at the Population Studies Center at the University of Michigan, as well as a Research Associate at the National Bureau of Economic Research, a Research Affiliate at CESifo, an IZA Research Fellow, and a CEPR Research Fellow. Her research focuses on issues in labor economics, demography and health in the United States, within the long-run perspective of economic history. Her work has examined the implications of the diffusion of modern contraception for women’s childbearing, career decisions, and the convergence in the gender gap. She co-edited a book on the topic, A Half Century of Change in the Lives of American Women. Most recently, her projects focus on evaluating the shorter and longer-term consequences of Great Society programs, including a recently co-edited book, Legacies of the War on Poverty. Bailey is also the PI of the NSF-funded Longitudinal, Intergenerational Family Electronic Micro-data (LIFE-M) project.