Longer maternity leave: Good for children of highly educated mothers

Do children do better in school if mothers stay longer at home after birth? A new IZA Discussion Paper by Natalia Danzer and Victor Lavy investigates this question by estimating if and how long-term human capital outcomes are affected by the duration of maternity leave, that is, by the time mothers spend at home with their newborn before returning to work. The authors exploit an unanticipated policy reform in Austria: the maximum duration of parental leave for children born on July 1, 1990 or later was extended from 12 to 24 months. Thus, as of July 1, 1990, newborns had a higher probability that their mothers stayed home longer after birth. Using scores from the Austrian PISA test to measure school performance and proxy human capital, the study shows that there is no significant overall impact of the extended parental leave on test scores at age 15. Yet, the authors also look at the effect for different subgroups, finding opposing effects. On the one hand, children of highly educated mothers do better in school if mothers stay home longer. In contrast, schooling outcomes of children from lower educated mothers seem to have been harmed: boys have lower test scores and girls have a higher likelihood of being in a lower grade. The authors conclude that in a country with no formal child care system for very young children, early maternal employment of highly educated women might have detrimental effects for their offspring. Yet, it remains an open question to what extent such potential negative effects can be mitigated or reversed through a high-quality formal day care system.