The economic impact of taking short parental leave: evaluation of a French reform

Olivier Joseph, CEREQ
Ariane Pailhé, Institut National d'Études Démographiques (INED)
Isabelle Recotillet, CEREQ
Anne Solaz, Institut National d'Études Démographiques (INED)

Many young women leave the labour force when their children are born. Although this withdrawal is usually temporary, it can have repercussions on the rest of their careers. Family policy plays a part, through replacement benefits for parents who choose to look after their children full-time or part-time for a specified period. Initially available after the birth of a second or subsequent child, the reform of the prestation d’accueil du jeune enfant (PAJE) in 2004 extended the benefit to the first child. The PAJE represents supplementary income for new parents, usually mothers, who interrupt their careers. This article, based on data from the fourth round of the Generation 98 survey conducted by Céreq, the French education ministry’s centre for research on qualifications, proposes an evaluation of the impact of the reform on the occupational trajectories of new mothers. It reveals that, since the 2004 reform, more young women choose either to stop working completely or to work less after the birth of their first child, and that, although their labour force participation is largely unaffected, the impact on their earnings is negative up to two years after the birth.