This report examines policy options for parental leave and evaluates them from an economics perspective. It finds that:
The goal of parental leave policy is to facilitate a frictionless transition between work/career activities and home/parental activities.
There are several potential market failures that could be generated that mean that private decisions with regard to parental leave do not reflect their social counter-parts. The sources of these market failures are liquidity constraints and indivisibilities in work and home tasks. The consequences may be an under-provision of parental leave from a child development perspective as well as a sub-optimal allocation of workers to jobs and firm-specific training as a result [Read Full Text]
Professor of Management Innovation Research Program, Centre for Ideas and The Economy