The Effects of Paternity Leave on Parents’ Earnings Trajectories and Earnings Inequality

Paid parental leave from work reserved for mothers and fathers is one policy that has been proposed to equalize labor force participation, wages, and childcare for men and women. We examine the effects of fathers’ use of parental leave on paternal, maternal and family earnings, as well as earnings inequality within the family exploiting the institution of the Quebec Parental Insurance Program which reserved 5 weeks of leave for fathers. We find that ten years after the birth, father’s use of parental leave increases family income and makes wages more equal within the family.