The impact of a family’s income level on the use of parental leave benefits

Summary

How does a family’s income level affect their use of parental leave benefits, especially the sharing of benefits between mothers and fathers? This study uses administrative data to explore how two policy changes to Canada’s parental leave policy in 2001 (Federal) and 2006 (Québec) affected the percentage of people in heterosexual couples taking parental leave and the rate of sharing among both parents. Using descriptive statistics and probability estimates, the authors found:

• Both policies disproportionately increased the use of leave among low-income families, although low-income families still took leave at lower rates than middle- and high-income families.
• Benefit sharing, where both parents take leave, also occurred at unequal rates depending on income, even after Québec’s 2006 policy to reserve leave for fathers.
• Although more low-income parents did take leave once the policies were implemented, the rate of only mothers taking leave did not decrease.
• However, the rate of only mothers taking leave did significantly decrease among middle- and high-income families.

These findings indicate that more research needs to be done in order to understand the barriers low-income parents (particularly fathers) face when it comes to taking advantage of parental leave and how policies can address these barriers.

Canada’s parental leave policy changes in 2001 (Federal) and 2006 (Québec) disproportionately increased the use of leave among low-income families, although low-income families still took leave at lower rates.

Research

The authors used quantitative data from tax files to analyze leave-taking among heterosexual couples with newborns in the years 1998 to 2012, which included around 2.5 million families. They paid specific attention to how policy changes in 2001 and 2006 affected the use of leave. In 2001, the federal government in Canada marginally expanded access to leave and increased the length of time that leave could be taken. For families earning less than $26,000 CAD, leave benefits were supplemented up to 80% of those earnings. In 2006, the provincial government of Québec further expanded access to parental leave for parents in limited or non-traditional employment, increased the benefit rates and the earnings ceiling, and created 5 weeks of non-transferable leave for fathers. The study considered parents who used leave or received employment insurance income during the year of the child’s birth, as well as those who took leave the year before or after birth. The authors looked at variations in the use of leave by the age of the parents, the number of previous children under 16, the province of residence, marital status, and the relative contribution of each parent to the family’s income in the descriptive analysis. These factors were controlled for in the probability estimates which focused on variation by income in the years before and after the 2001 and 2006 policy changes. The study divided families into three income categories: less than $30,000 (low-income), $30,000 to $89,999 (middle-income), and $90,000 or more (high-income).

Findings

The authors found that the use of parental leave was lowest among low-income families (43%) compared to middle and high-income families with rates over 70 and 80%. The use of parental benefits increased significantly between 1998 and 2012 due to an increase in both parents using benefits. The 2001 and 2006 policy changes significantly increased the percentage of families using benefits, especially both parents. However, there was substantial variation across income groups. The federal policy reform in 2001 increased use more significantly for low- and middle-income families, than for high-income families. For low-income families, mothers only using leave increased by 2.6 percentage points, while both parents using leave increased by only 1.6 percentage points. For middle-income families both parents using leave increased by 4.8 percentage points, while mothers only using leave actually declined. For high-income families, these effects were even more pronounced, with the rate of only mothers using parental leave decreasing by 4.6 percentage points and both parent use increasing by 6.6.

The effects of the 2006 leave policy in Québec were more significant for low-income families, who increased their overall use of parental leave by 11 percentage points. Middle-income families increased their use by only 6.8 percentage points and high-income families increased their use by 5.3. However, the effects were reversed when it came to the sharing of benefits. For middle- and high-income families, the 2006 policy led to an increase in both parents using leave of over 20 percentage points and a decrease in only mothers using leave of over 15 percentage points.

Research indicates that in middle- and high-income families where only mothers had taken leave before the policy changes, both parents were taking leave afterwards.

For low-income families, both parents taking leave increased by a modest 8.6% and there was no significant decrease in only mothers taking leave. Although more low-income families took leave after the 2006 policy change in Québec, the rate of only mothers taking leave remained relatively constant.

Implications

• Parental leave policies have differential effects–Parental leave policies do not benefit all people equally. Middle- and upper-income parents are more likely to take leave and more likely to share benefits among both parents in a heterosexual couple than low-income families.
• Different tactics are necessary to increase leave among low-income parents–Policies that broaden access to leave benefits by reducing the amount of time people must work to earn benefits, increasing the benefit rate, and/or eliminating waiting times for benefits disproportionately improve use among low-income families. Although, it’s important to note, that these policies have not increased rates enough to make them equivalent to those among middle- and high-income families. While reserving time for fathers to take leave did increase both parents’ use of leave across the income spectrum, these increases were more pronounced for middle- and high-income families.
• More research is needed to address potential barriers–This study, and several others in European countries have shown disparities in the use of leave across income-levels. However, none of these studies have explored why these disparities persist even in countries with more generous benefit rates and non-transferable paternity leave. Are economic factors, job-specific factors, social factors, or some combination keeping low-income families from using these benefits? More research is needed to discover what these barriers are so that policies can be developed to address them.