“Does birth-related leave make mothers more satisfied “Does birth-related leave make mothers more satisfied?” Lecture for the OECD/Korea Centre, KIHASA, November 26, 2010 Dr Simon Chapple Social Policy Division, OECD Directorate for Employment, Labour and Social Affairs simon.chapple@oecd.org www.oecd.org/els

Main research question Does being on birth-related (maternal/parental) leave make mothers more satisfied with the quality of their lives? But first…why life satisfaction?

Background to use of subjective measures Proxy for achieved utility Literature dates from the 1970s But enormous growth since mid-1990s Stiglitz-Sen-Fitoussi report to the French government has given the work a governmental push Recently, in November 2010, the UK government announced they will regularly measure and report on subjective well-being

Two main types of measures of subjective well-being Cognitive Experiential

Cognitive measures of subjective well-being Typically but not necessarily single item, e.g.: “On the whole, are you very satisfied, fairly satisfied, not very satisfied or not at all satisfied with the life you lead?” Eurobarometer, since 1973 for European Community countries “Please imagine a ladder with steps numbered from zero at the bottom to ten at the top. Suppose we say that the top of the ladder represents the best possible life for you, and the bottom of the ladder represents the worst possible life for you. On which step of the ladder would you say you personally feel you stand at this time, assuming that the higher the step the better you feel about your life, and the lower the step the worse you feel about it? Which step comes closest to the way you feel?” Gallup World Poll, since 2005 for 150 countries

Experiential measures of subjective well-being Typically multi-item: Positive measures – “Did you smile or laugh a lot yesterday?” Negative measures – “Did you experience the following feelings during A LOT OF THE DAY yesterday? How about Sadness?” Gallup World Poll. Gallup Positive Experience questions also include: feeling well-rested, being treated with respect all day, learning or doing something interesting, and experiencing enjoyment. Negative Experience questions also ask about physical pain, worry, stress and depression.

But first…how does Korea do in terms of cognitive and experiential measures compared to other OECD countries?

Korea scores below average on life satisfaction – cognitive measure

Korea scores below average on positive experience and average on negative experience

Role of culture in explaining differences in subjective well-being between countries Translation of the question Meaning of the question Fewer problems for experiential measures – “a smile crosses cultures”? Self-assessed health also lower in KOR and JPN compared to OECD Validity via objective factors: work time high, sleep low, suicide high in KOR

Determinants of subjective well-being

Do people have a fixed level of subjective well-being? Some part of subjective well-being is stable (genes/personality) People do adapt to many positive and negative life changes But… Some environmental changes cause permanent changes in self-assessed quality of life

…and the Not so very important. The current academic consensus: The following matter for subjective well-being… The Good… Marriage Social networks Self-assessed health Good governance …the Bad… Unemployment Divorce Bereavement Disability Mental illness …and the Not so very important. Family income (small, diminishing or no effect) Children

What does this academic literature tell us about social policy that we didn’t know before? It tells us something of where to direct our policy attention, what is important and what may be less so But all this remains one degree removed from direct policy choices What about the more directly policy-related literature?

A more direct approach to whether social policy matters Use of policy changes to see if policy makes a difference (natural or quasi-experimental approach) There is a small literature using actual policy changes to see if social policies can influence quality of life in terms of changes in pension ages and changes in women’s rights (abortion, contraception, etc)

We need to find significant social policy changes in countries where we have data on subjective quality of life Several promising social policy areas where there are changes: (1) Birth-related leave (2) Pensionable age

The focus herein is on birth-related leave policy changes

Does birth-related leave improve self-assessed health, mental health or life satisfaction? Chatterji and Markowitz (2004) find that returning to work later reduces mothers’ depressive symptoms (USA). Chatterji and Markowitz (2008) find that doubling maternal leave from 9 to 18 weeks reduces depressive symptoms by 5 percent, and the likelihood of mothers’ reporting poor health by 1 percent (USA). Doubling in Canadian birth-related leave to one year is found by Baker and Milligan (2007) to have no impact on mothers’ self-reported health or depression. Liu and Skans (2009) find no effect for the Swedish leave expansion in 1988 from 12 to 15 months on mothers’ hospital admission for mental health reasons. Frey and Stutzer (2003) include find a positive but statistically insignificant effect of being on maternity leave for life satisfaction in Germany. Pezzini (2005) finds no effect of parental leave expansion on life satisfaction of women aged 15-49 in Europe.

We examine the case of Germany Why? Two data sets Two approaches Lots of birth-related leave policy changes No one has done it Data Eurobarometer (all women during child-bearing years) German Socio-Economic Panel (GSOEP) (women on birth-related leave)

The data: Eurobarometer The Eurobarometer is a cross-sectional data set of the population 15+ years of age It has a sample of various European Union countries of between 1000 and 2000 people (approx.) It has been carried out (almost) every spring and autumn in Germany (the Federal Republic of Germany before 1991) since 1973 The latest data are from Spring 2009 Life satisfaction – 4 point scale

The data: German Socio-Economic Panel The GSOEP is a representative, longitudinal survey of more than 20,000 persons in about 12,000 private households in Germany. It has been carried out every year in the Federal Republic of Germany since 1984 with the same persons and families. The latest data are from 2009 Life satisfaction – scale of 0-10

German policy changes (1) As at 1973 women had six weeks of paid, job-protected maternity leave before birth and eight weeks (two months) after In 1979 an additional four months of extended paid and job-protected maternity leave were added. Total post-birth leave was thus six months. In January 1986, eight months of parental leave replaced the four months of extended maternity leave. In January 1988, parental leave rose from eight to ten months In July 1989, parental leave rose from ten to 13 months In July 1990, parental leave rose from 13 to 16 months

German policy changes (2) In January 1992, parents were entitled to take job-protected leave until their child was age three (but paid only for 18 months as before –two months maternity and 16 months parental). In January 1993, the payment period for parental leave rose from 16 to 22 months From January 2001 parents could chose between shorter and better paid parental leave for 10 months and the existing 22 months In January 2007 a new system with a stronger earnings related payment was introduced, with 14 months of total post-birth payments. 28 months of total paid leave possible at a reduced payment rate for 26 months of parental leave.

Do the rises in job protected birth-related leave from 2 post-birth months in 1973 to 24 paid and 36 total months increase life satisfaction of eligible German women?

Treatment and control groups: Distribution of births in Germany by age of mother, 2005

Differences in average German life satisfaction between women aged 20-39 and women aged 50+, and birth-related leave policy changes, 1973-2009 (dotted lines)

Is being on birth-related job-protected leave associated with higher life satisfaction for German women?

Life satisfaction and birth-related leave: OLS results

But does being on leave cause higher life satisfaction But does being on leave cause higher life satisfaction? Here we use the policy changes to check this via instrumental variables (IV) estimation….

Life satisfaction and birth-related leave: IV results

Conclusions Women in their fertile years are not affected by having a right of access to birth-related leave in Germany But women on birth-related leave have higher life satisfaction, Birth-related job protected leave for women maintains the positive effect on life satisfaction of employment The effect is relatively large, about the size of being employed, or equating in value to a 70-80% rise in household income It may well be the combination of time off and the right tor return to work that results in higher life satisfaction The effect seems to be causal, running from leave to satisfaction From here: DID methods and propensity matching

THE END…. THANK YOU!

Some relevant links …. OECD social policy division, via www.oecd.org/els/social Society at a Glance (2009), via www.oecd.org/els/social/indicators/SAG Doing Better for Children (2009), via www.oecd.org/els/social/childwellbeing Growing Unequal? Income Distribution and Poverty in OECD Countries (2008), via www.oecd.org/els/social/inequality OECD Social Expenditure database, via www.oecd.org/els/social/expenditure OECD Family database, via www.oecd.org/els/social/family/database