The impact of parental leave policy on the intensity of labour-market participation of mothers: Do the number of children and pre-birth work engagement matter?

Abstract

In this article, we examine the impact of the introduction of parental leave policy in 1999 on the labour-market engagement of mothers with one and two children in Luxembourg, who had been working 20 or more hours per week before childbirth. Labour-market engagement is measured by the number of hours worked monthly, 1, 2 and 3 years following the birth of the last child. Analyses are conducted using longitudinal social security records data from 1995 to 2002. The difference-in-differences (DiD) method is used to establish a causal relationship between the introduction of the policy and its outcomes. The results of the analyses reveal that among mothers with one child, the introduction of the policy had a significant and positive impact on the working hours during the first 3 years after childbirth. Among mothers with two children, the impact of the policy was significant for 1 year after childbirth. Heterogeneity effect analysis shows that single-child mothers who worked part-time before childbirth were substantially more responsive to the policy than their full-time working counterparts.