Skill-PAL
Roman Bozhko Unsplash
Skill-PAL
Title: Skill loss during parental leave and its role for gender disparities in earnings
Acronym: Skill-PAL
Funding Body: Austrian Academy of Sciences
PI: Sonja Spitzer
Project Number: DATA_2023-39_Skill-PAL
Time Frame: 01.07.2024-30.06.2026
Data Management: PI & project team
Skill loss during parental leave and its role for gender disparities in earnings
The Skill-PAL project provides a missing puzzle piece for understanding the persistent gender differences in earnings. Studies have shown that the longer child-related career interruptions of mothers are related to their lower income, but the mechanisms behind this link are still unclear. Prior research has often suspected that mothers lose work-related skills during extended parental leave durations, which could be one explanation for their lower earnings, as human capital is a major determinant of labour market outcomes. However, empirical evidence for this potential link is missing.
We fill this important research gap by answering the question “Does skill loss during parental leave contribute to gender disparities in earnings?”. The interdisciplinary project takes a novel approach by matching detailed administrative data for Austria and Sweden with test scores on work-related skills from the OECD’s Programme for the International Assessment of Adult Competencies Survey of Adult Skills. This allows us to link parents’ skills to their income and labour market trajectories, as well as to those of their partners. By focusing on Austria and Sweden, we will compare two countries with very different family policies, gender norms, and labour market outcomes of mothers and fathers.
In addition, we investigate how parental leave policies affect gender differences in job skills and earnings. For this, we compare the statutory parental leave regulations of 32 OECD countries from 1960 to 2023 and link them to the skill scores of parents. This enables us to estimate the effect of statutory parental leave duration on work-related skills for mothers and fathers during working age and in later life.
Our findings will inform the ongoing discussion on the reconciliation of family and work across economics, demography, and other fields of research that evaluate family-related policies. Most directly, we contribute to the vivid literature on the design of parental leave policies and their ambiguous effect on parents’ labour market outcomes. Our research will help assessing statutory leave duration from a policymaker’s perspective, who has to balance care and protection during significant life events, financial aspects, workforce productivity, and broader societal objectives such as gender equity.
This project is also highly relevant in light of demographic change and the current skill shortages across OECD countries. Exploiting existing human capital potentials is considered a promising strategy to address the shrinking skilled labour force. Here, increasing the labour market participation of mothers is often seen as an important lever. Our project will assess whether long parental leave has an impact that goes beyond the mere absence of skilled mothers, i.e. whether parental leave is linked to human capital depreciation. The results may also prove important at the organisational level, where skill maintenance strategies are essential for companies to manage skill erosions during parental leave and other career interruptions.