The effect of New Jersey's paid parental leave policy on employment

Abstract

Paid parental leave policy remains a continuing source of controversy in the United States. Advocates for parental leave policy maintain that it has a positive effect on child rearing outcomes and family happiness. Critics maintain that paid parental leave will cause firms to hire fewer women. This paper evaluates the critics’ claim that paid family leave entitlements will reduce employment using the New Jersey parental leave policy that took effect in 2009. Our estimates suggest that the New Jersey family leave law reduces overall employment by about 3.3%. However, the employment reductions among women, people of childbearing age, and more highly skilled workers are relatively larger. Finally, we find little evidence that parental leave mandates have employment effects for unskilled workers.