Maternal-Biased Parental Leave

Abstract

The division of parental leave time between parents is in most countries extremely skewed towards mothers. In this paper we argue that, although it may be rational for a family to let the mother take the main part of the parental leave, the division is too skewed towards the mother even from the family's own perspective. The reason for this inefficiency is that parents have present-biased preferences, which make them place too much weight on the immediate utility effects of childcare. Time-consistent welfare can therefore be improved by increasing fathers' share of the family's parental leave time. In the light of recent regulations in the parental leave system in many countries, we argue that provision of commitment devices is more preferable than regulation when preferences are heterogeneous or uncertain.

Keywords: parental leave, present-biased preferences

JEL Classification: D1, J13, J16, J22