EMPLOYMENT MATTERS A lunchtime seminar series about employment relations and the world of work

Sharing Responsibility? Short and Long-term Effects of Sweden's "Daddy Month" Reform Dr John Ekberg Department of Economics Stockholm University with Rickard Eriksson and Guido Friebel London, 27 May 2004

Background to the Swedish parental-leave system In 1974 the maternity-leave system was changed to parental-leave system. Parents compensated in relation to earnings for 360 days. January , the “daddy-month” was introduced. (The objective of the presentation today) January , the second “daddy- month” was introduced.

Changes in the Swedish Parental Leave System Other changes in the parental leave benefit system: 1995: Introduction of the daddy-month. 2002: Introduction of the second daddy- month. Guarantee level 120 SEK/day 2003: The guarantee level is increased to 150 SEK/day

Father’s share of parental leave

Evaluation strategy of the “daddy month” For children born 14 days before and 14 days after the introduction of the first daddy-month in 1995 we study: Fathers’ parental leave (short term effect) Fathers’ care for sick children (long term effect) A natural experiment We use household time instead of earnings

Objectives of the reform "It is important that fathers use their opportunity of taking parental leave. Research shows that an early established and close relation between father and child is beneficial for both the father and the child and provides a good founding for the relation later in life.... An increased use of parental leave by fathers should contribute to a change in attitudes among managers so that they will view parental leave as something natural to consider when planning and organizing the work. Such change in attitudes is necessary for both men and women to dare to take parental leave without a feeling of jeopardizing their career or opportunities of development at work. Another reason for increasing fathers' use of parental leave is that women's prospects of achieving equal opportunities with men in the labor market are limited as long as women are responsible for the practical housework and children. A shared responsibility for practical care of children would mean a more even distribution of interruptions in work between women and men, and women would thereby gain better opportunities of development and making a career in their profession." From the Government Proposition 93/94:147 to the Swedish Parliament

Objectives of the reform (in summary) Enhance an early and close contact between father and child. Reduce employer discrimination against fathers and mothers on parental leave. Less unequal division of household and child care responsibility in order to achieve less unequal labor market outcomes.

Natural experiment? The reform was decided on in June Children’s date of birth is normally distributed with standard deviation two weeks. No difference in age distribution between mothers of children born before and after the reform.

Mothers’ age distribution

The number of births per day

Economic theory and the Daddy month Why is parental leave unevenly distributed between men and women? Specialization (Becker 1981) Signaling (Spence 1973) Gender roles, Economics and identity, Akerlof & Kranton (2000) Reinforcing factors Human capital investments and HC depreciation during time out Replacement costs for employers

Fathers’ share of care for sick children by level of parental leave

Previous empirical studies A.Effects of time out on earnings Nordic countries Stafford & Sundström (Labour 1996), Sweden, Telia , men and women, support for signaling for men. Albrecht et al (JHR 1999) Sweden ”Family and Work” data , men and women, some support for signaling for men. Smith & Datta Gupta (Economica 2002) Denmark for women, support for human capital depreciation, no support for signaling.

Between European countries Ruhm (QJE 1998) Panel data for nine countries Parental leave increases women’s employment, but decreases wages. B. Determinants of fathers’ parental leave Sundström & Duvander (Eur. Sociological Rev.), Swedish register data 1994, positive effect from income and education.

Data Register data, hence not self-reported Data cover all occurrences of parental leave and care for sick children in Sweden since 1993 Source: National Social Insurance Board

Number of observations in samples Sample Children Fathers Mothers Mothers and fathers

Mean of parental leave days in the cohorts two weeks before and after the reform SampleBeforeAfter MeanStdMeanStdMean-difft-stat Fathers 360-days flat Mothers 360-days flat

Distribution of fathers’ parental leave before and after the reform

Distribution of mothers’ parental leave before and after the reform

Total number of days out for care of sick children (before reform).

Fathers’ share of care for sick children, two week cohorts.

Difference in fathers’ shares of care for sick children by year

Fathers’ share of care for sick children by level of parental leave.

Summary of findings The daddy-month did increase fathers’ use of parental leave. The increase in parental leave did not increase fathers share of care for sick children. Men’s share of parental leave is positively associated with their share of care for sick children.

Policy Details in policy implementation potentially important, e.g. the unexpected effects of the Swedish 8 year rule. “Icelandic model”- 1/3 to mothers, 1/3 to fathers, and 1/3 to allocate unrestricted. Decreasing reimbursement rate with the age of the child. To give fathers incentives to stay home with young children.

DISCUSSION

EMPLOYMENT MATTERS A lunchtime seminar series about employment relations and the world of work