The Impact of Provincial Maternity and Parental Leave Policies on Employment Rates of Women with Young Children in Canada

Maternity and parental leave policies are on the forefront of the current political agenda in Canada. This paper answers the question: does maternity and parental leave (M/PL) policy raise or lower the probability of employment for a woman? One unique feature of M/PL policy in Canada is the variation in mandated unpaid job-protected leave allowances across provinces. This variation is used in this study to identify the effect of provincial M/PL policies on employment rates of women with young children. Using the Canadian Labour Force Survey (LFS) data from 1976 to 2000, I find evidence that M/PL policy reduces the gap between the employment probabilities of women with young children versus women with older children. Moreover, a difference-in-differences model predicts a 3 to 4 percent increase in the probability of employment for women with young children (aged 0 to 2) relative to women with older children as a result of M/PL policy.