Sébastien Fontenay (Université Libre de Bruxelles) will present "The Unintended Consequences of Maternity Leave Allowance on Fertility and Career Decisions"

Abstract :
I examine the impact of maternity leave allowance generosity on first-time mothers’ subsequent fertility and career. Identification is based on a Regression Kink Design (RKD). I exploit a discontinuity in the benefit formula, which results in a lower replacement rate for women with pre-leave earnings above the maximum threshold. Using a rich set of administrative data on Belgian mothers from 2002 to 2016, I estimate that for each additional euro in daily allowance the probability of having a second child increases by 0.8 percentage point. Subsequently, I explore the consequences on their career and show that the probability of remaining in the labor force declines with the level of benefits. Heterogeneity analysis suggests that maternity leave allowance generosity affects the fertility of all women in the same proportion, but the negative consequences on employment are concentrated on those who used to earn less than their partner before entering motherhood. No symmetric effect is found on the partner when the mother was the main breadwinner. My results imply that mothers make decisions about their total fertility based, at least in part, on the generosity of maternity leave allowance, with for some long-run implications on their probability of remaining in the labor force.