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| Paid Maternity Leave and Children's Long-Term Human Capital Accumulation |
| LU Yuanping, ZHAO Ying, SHI Zhilei
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School of Public Finance and Taxation/RCID, Zhongnan University of Economics and Law;
School of Public Administration, Zhongnan University of Economics and Law |
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Abstract Over the past decades, countries around the world have adjusted their domestic population policies to cope with the crisis of low fertility. One especially important aspects of such policies is extended maternity leave. China has repeatedly changed its domestic population policies in recent years. The gradual abolishment of the one-child policy, which was in place for almost 30 years, is vital for both increasing the quantity of the workforce and ensuring its greater quality (i.e. a skilled workforce). However, China's current population policy is quantity-oriented. So far, there has been little research on the effect of adjustments to maternity leave on agents' behavior, which makes formulating and implementing population policies and evaluating their short-and long-term socio-economic effects more difficult. A direct consequence is that the relaxation of the one-child policy has not brought about the extension of maternity leave or reduced individual agents' fertility costs. Because it affects the speed and quality of future generations' human capital accumulation, a well-developed maternity leave policy will have a major influence on the formation and adjustment of the skill structure of the Chinese labor market and will lead to sustained economic development.
Our paper utilizes data from the Population Census of 2005 and the major revisions in China maternity leave policies in September 1988, Rules on the Labor Protection of Female Employees,which lengthened maternity leave from 56 to 90 days. This extension could increase the time allocation and economic resources of female workers in both the family and the labor market, and could improve the human capital accumulation of the next generation. We use RD-DID as our main technique to evaluate these effects to overcome potential heterogeneity in individuals around cut-off points. The results show that prolonged maternity leave policies promote the human capital accumulation of the next generation, even in the absence of other reforms. The positive effects are larger for those who are better off (in terms of economic resources), taking heterogeneity into consideration. The underlying mechanism is due to direct formal care rather than better health or increased family resources. Prolonged paid maternity leave policies therefore have positive effects on human capital accumulation in China. The main focuses of adjusting population policies should be the potential effects of extending paid maternity leave and changing the focus of population expansion from quantity-oriented to quality-oriented policies.
In our conclusion, we make the following suggestions. (1) Paternity leave should be promoted along with extended maternity leave. By improving the family's ability to rationally allocate leave time, this change will strengthen the positive effect of parental leave on intergenerational human capital accumulation and weaken the negative effect on female employment. (2) Given the increased labor costs arising from paid maternity leave, formulating an unpaid maternity leave policy is of importance for complementing existing policies based on other countries' experiences. Not only it will partly reduce the limits on female workers' ability to stay home so that they can make a better trade-off between family and career, but it will also alleviate discrimination in the recruitment of female employees, which will improve gender equality.
The main contribution of our research is to identify the effect of maternity leave adjustment on the next generation's human capital accumulation. The difficulty of our research is in that both birth and maternity leave behavior are endogenously decided by individual families, who are influenced by many unobservable factors. This paper utilizes the major revisions in China maternity leave policies in September 1988, which extended maternity leave from 56 to 90 days. Because of the short time interval between the policy's promulgation and implementation, this shock allows us to scientifically assess the relative effects of this adjustment to Chinese maternity leave policy and to determine its long-term effect on population structure.
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Received: 16 January 2019
Published: 29 November 2019
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