Episode 15: Take Paternity Leave Like a Boss

for all investors. Hello and welcome back to Bloomberg benchmarkt podcast about the global economy. I'm Tori Stillwell, an economics reporter with Bloomberg News and d C, and it is Thursday, December tenth. I am with my colleagues inco hosts Dan Moss, who has moved to New York, and Akiedo still in San Francisco. Hey guys, Hey guys, how's it going. We're all super excited about our episode this week, which is about the economics of paternity leave. It's one that we've

been anticipating for a while now. Dandy want to tell everyone why I am going to be a father next week. The ju date is December fift and I am taking three weeks of paternity leave, which is a first for me. We thought this was a great time to share a little bit and to talk to someone who's studied in a serious academic manner the pros and cons not just of maternity leave, which is common enough, but paternity leave. What's in it for the dads and what does the

research show about what's in it for the kids. When our daughter is a little older, she probably won't want me around for three weeks. I've got to cash in now. So Dan, our hope is that by the time you leave our studio today you are going to be armed the best that economics has to say about the next few weeks that you're going to be spending with your new baby, and that we have Villiam, a Dame on the line. He's a senior economist with the O E. C D and he leads a team of analysts there

who are experts on family and children policies. Hello Willam, Hello, good evening, How are you doing great? Hi? Hi, thank you so much for joining us. Well, let's start with some context on parental leave in general, with some particular scrutiny on the US. So we had the family and medical leave Act of nine, which guaranteed that new mothers and fathers and companies with at least fifty employees can take up to twelve work weeks of leave that covers

roughly half the workforce. However, none of that leave is paid for anyone, and the fact that mothers getting no pay in particular makes the US an outlier among most nations. In fact, in a study of a one and eighty five countries, only the US and Papua New Guinea provide no statutory cash benefits during maternity leaves. So what do

we know about paid paternity leave in other countries. Um, Paid fraternity leave is increasing in quite a few OB city countries to the extent that by now about one foot of O city countries provide paid leave for fathers in one form or another. Well, as you just said, in the US, even the maternity leaf is unpaid. Now that said, there are many corporations which do pay it. It's just not required by law to be paid. No. Well, the last year, this time last year, I was in

the US looking at a different paid leave models. There are paid leaf models employers. Some employers provide paid leave, but then they often provide paid leave to the workers they would like to keep. Most which means that some high flyers or very skilled people will get the option to vail of a couple of weeks have paid leave, but not everyone does, and in particularly low income workers who might be relatively easy to replace in the job they're doing, do not get income support, which means that

their child doesn't get a great start in life. Some states in the US also provide paid leaves in different forms. There is short term or Temporary Disability Insurance, which provides paid leaves in five er States, and Puerto Rico and California, and New Jersey and Rhode Island have paid family leaves

for both men and women. For our listeners out there, the o e c D is kind of like this elite club rich nations and the o e c D average for paternity leave is nine weeks at sixty of full pay um, and the US, at least on a federal level is zero. Villain. You know, I was looking at these o e c D stats. I saw that Japan and Korea offer some of the most generous um paid paternity packages to their fathers, and I was really surprised to see this because you know, I grew up

in Japan. Um My, I'm Japanese. I spent half my life there and it's such a conservative country when it comes to gender norms. Um. So I'm assuming that it's a case that not all Japanese fathers actually take this benefit even though it's available. You're right, absolutely not. But Japan and Korea are very interesting countries and there are a good example of, um you know, the different reasons

governments have to introduce paidly for fathers. Basically, what what is one of the main drivers of policy development in both these countries is to persistently low fertility. Right, so for years the government has been trying to design policy measures that would help increase fertility rates, and they think

one of those. Well, the thing is, one of the main issues young Japanese men and women have when they're thinking about forming a family is that they face a very difficult issues in terms of reconciling work and family commitments. Because the working hours in a regular job in Japan, as you will know, are very long. You commit yourself to the firm and in return you get um lifetime employment and increased renumeration over the life course in a

seniority place system. Now, men and women cannot combine their work practices with with a family life. And in the past, when when the male breadwinner model was widely accepted, that was no problem. But nowadays in Japan, young women are more likely to have an educational degree high tertiary education degree than young men, and they want to pursue a labor marked career just as the young men do, and

it's very difficult to combine that with having children. So what the Japanese government is realized is we have to help our younger people. And one way of helping women and men are combining work and familiar life is giving them the right to pay paternity leads. It is relatively new. Take up among in Japanese men is very low. It's about to p and two of our colleagues in Bloomberg's Tokyo office have just taken paternity leave now, having said

that they are both expatriates. Is there any evidence that these relatively generous provisions in Japanese law are having the desired policy effect? The demographic tied there seems like a difficult thing for just one policy to swim against. I guess the question could apply to a career as well.

For this particular measure. I think that it's too early to tell whether it has an effect in future on the on the demographic trends, but I think that the realization in both Japan and Korea is growing that it's not so much that they have to change their social policy because they have already made a lot of changes in that they also have to change their workplace practices and that is much more difficult to accomplish. This is

all fascinating. After this break, we will go through the pro and con lists for Dan taking a long paternity leave after award from our sponsor. What do traders want to limit risk? Access every opportunity and trade on a level playing field. Nat X binary options let you set your maximum profit and loss before the trade, so your risk is always limited. Find opportunities in multiple markets, stock in dissees, commodities for X, even economic numbers, and bitcoin,

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really is all about me. Is there any statistical evidence that men who avail themselves of paternity leave suffer, at least, according to some statistical models, a decline in earnings over time? No? Intuitively yes, in statistically no, because there is not a long time series of UM in most countries of men that have taken leave on on a large basis, So you you you don't get a large enough statistical sample

over a large enough period to look at that. There are some studies in Sweden where parental leaf has been been taken for a longer period of time. The first period of parental leave was introduced UM in the the father month was introduced, and there you have some studies on the effect of earnings on on your own earnings and on spouses, but the amount of studies on that particular topic over time is very small. I'm a guinea pig in the US, definitely. So we have all this

context that we just discussed. But let's go through the economic research to say, or at least to come up with some good idea of how long a leave Dan should personally take. Will go through the case for him to be careful and limit the length of his leave, and then we'll go through the case for him to take as much leave as he possibly can. Right, so you know the case for Dan to be a little

bit careful in taking a longer leave. Earlier, we heard from Villain that there isn't a lot of research out there that shows what the career implications are of parents who take a longer leave, but we have some studies and um, at least according to one study out of Sweden, this is by Ellie and Johansson um, mothers who took a longer leave got paid four point five percent less and fathers who took a longer paternity leave got paid

seven point five percent less. That was four years down the road, So it's kind of like a medium term effect. But like we said, the research out there is like, it's pretty is a small sample. Economists are still trying to learn about this villain. If it is the case that parents end up earning less down the road when they take longer leaves, how do you think that mechanism works. Why do you think that happens? Well, it depends a bit. It depends on various factors. One is the the average

the duration of your spell of leaf. In any country like Sweden, the overall paid leaf period is around a year and a half. And if you're out of the work force for out of the workplace, i should say, for that long period of time, that affects your your skills. And if you have two children in a rapid succession, that means that you're out of the work place for quite a long time. So it becomes the effect becomes

even bigger for man. The effect in the in this particular Swedish studies is bigger because they're probably fewer men who take paid leave for a prolonged period of time. But that is to some extent, you know, the proof of the of the pudding is in the eating. At present, men women are the most common new leave takers, and as long as that is the case, there might be employers who feel that they should invest less in women

or otherwise not promote them in their career path. UM. So as there are fewer men who around who take a father's leave, the ones that do um are more punished between brackets for for their leave taking behavior. So the wags penalty is larger. We just ran through the conents. What are the pros or if we're making the case for Dan to take more time, what should we think about. I think the one that comes to me most immediately is just your better bonded with your child and that

leads to better life outcomes for them. That is um one of the findings I mean, and that's also one of the reasons why governments are investing in in paid parental leave, because it invests at the very beginning of life when you can change behavior of of the father and your most effective in that sense. The study we have done in on this I think best is out um that you know there are positive effects on cognitive child cognitive development if farther a stake leave for a

longer period. That's just an amazing finding that your your child might end up potentially a little smarter if you're if the father takes more time off. It's it's it's about the bonding. It's about from what we can see, what the evidence suggests is it's about not even so much the length of time as the quality of time. So when it comes to personal contact and interaction with with the child, but that that is just one player in the game. I don't know whether than his partnered.

So for him, it would also matter what his partner is doing, whether his partner is at work, whether him taking a longer time facilitates his partner to to stay in touch with work as well. I mean, there's all sorts of considerations that that I do not know. The level of earnings is an portant consideration also of his partner.

I mean, in terms of parents taking leave. From an economic perspective, it makes sense if the parents who earns the least of the two um takes more leaves, and unfortunately that's that's often women, and that's why that's this trade off. But it's it's sort of like a negative cycle here. If women are consistently the ones making lesser, they're taking more time off, so it's hurting their potentially hurting their career outcomes, their earnings all over again. It's

just this cycle that gets perpetuated. Yeah, and it's very hard to break. But what you see is that among younger couples it's much more normal between invoted commas um to to try and define the cat tasks more equally. So there is definitely change in the air and the other things. Of course, like I said, if you have more young um female professionals, the chances that they UM

earn more is also elevated. Hence the chances that they also in the household bargaining will be in a stronger position and will will push successfully for a better sharing. What I'm hearing is millennials, it's all up to you, don't screw it up. I think that you you raised a good point earlier. Also, though it's sort of this

culture has to be set from the top. If if younger workers, if lower level workers see management taking paternity leave, um, they might feel that it's more acceptable for them to do so as well, which is why it is so important for people like Mark Zuckerberg and people like Dan Um who is an executive editor here to take that time off. In the eyes of proponents of paternity leave,

the leadership is come play an important role. It's also often senior executive are are are a bit older, so it's not just senior leadership, but it's also middle management which which come play an important role. And I mean I think that for for middle management that they should also encourage their staffers to to to take leave if they can, and UM, the system in within companies should might might give incentives to to middle management to encourage

to do so. Looking from from from an OCD perspective, the fact that the UH, the the the US is the is the one who is the country without paid leave, but that there are states within the US, like California, like New Jersey, like Rhode Island who actually do provide paid family leave on an individual basis. Fathers can take it and fathers do take it in California, and increasingly so over the last ten years, the California and economy,

the New Jersey economy hasn't ground to hold. Um. It is not that difficult or that expensive to to run a paid family leave or paid parental leave system. So UM and I think those are very important points to get across to American policy. MAXs Well, thank you so much, Dylan for joining us. It's been great to have you on. It was my pleasure to enjoy a couple of nights sleep you can still get. Yeah, thanks Will, thanks again

for listening to Bloomberg Benchmark. At least Aki and I will be back next week, by which point then maybe cradling his newborn baby in his arms. He's naming it Victor Area, He's naming it after me. Don't let him tell you differently. So you might not hear from Dan for the next few episodes, but stay tuned and you can find us on Bloomberg dot Com, iTunes, SoundCloud, Stitcher,

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