Longer Parental Leave Negatively Affects Children’s Education and Deepens Socioeconomic Inequalities

Research conducted by authors from CERGE-EI and the Prague University of Economics and Business (VŠE) examined the impact of longer parental leave on children’s human capital. The findings reveal that extending paid parental leave to four years negatively affects children’s future education and labor market outcomes.

The extended parental leave not only delays preschool attendance but also reduces the likelihood of later university studies or participation in further education, such as professional training. These negative effects primarily impact children from lower socioeconomic backgrounds, exacerbating educational and societal inequalities.

The study by Klára Kalíšková and Alena Bičáková analyzed the effects of a 1995 policy reform that extended parental leave from three to four years. The researchers identified adverse impacts on investments in children’s human capital and their integration into the labor market. According to the study, affected children are six percentage points less likely to attend university and four percentage points more likely to be unemployed or not participating in education, employment, or training (NEET) by the ages of 21–22. NEET, an acronym for “Not in Education, Employment, or Training,” refers to young people who are not studying, working, or preparing for work and who are financially dependent on their parents.

Longer Parental Leave Negatively Impacts Higher Education Participation

The authors note that while the negative impact on higher education is long-term (affected children are 8 percentage points less likely to complete university by age 27), the adverse effect on NEET status is temporary. The findings indicate that the reform’s impact was most pronounced among recent high school graduates aged 21–22, diminishing with age. This trend correlates with the difficulties high school graduates often face in entering the labor market, which tend to ease with subsequent job experiences. However, the disparity in educational attainment appears to have a significant and lasting negative effect on lifetime earnings and job quality.

The results are most pronounced for children of mothers with lower educational attainment, whose likelihood of pursuing higher education decreases by up to 12 percentage points. Specifically, daughters are more affected by this phenomenon than sons. “Our findings, based on data from the Labor Force Survey, align with previous evidence showing positive long-term effects of universal three-year parental leave on children’s outcomes, while extended parental care—four years—delays children’s enrollment in preschool education,” the authors explain in their study.

The 1995 reform led 27% of mothers of three-year-old children to extend their caregiving period by an additional year, a significantly higher rate than observed in earlier studies on parental leave reforms. “Daughters of less-educated mothers are more likely to be inactive in higher education and instead focus on domestic work, while sons of such mothers are more frequently unemployed,” the study further elaborates.

Extended Home Care Adversely Affects Cognitive Skill Development

Through a robust data analysis, the study concludes that the quantity and quality of inputs provided by full-time maternal care during early childhood may be inferior to those offered by subsidized formal childcare. “Intellectual stimuli and social interactions available in public preschools are particularly crucial for the accumulation of cognitive (educational) and affective (behavioral) skills, which are not easily replaceable by traditional parental care, especially from less-educated mothers,” Klára Kalíšková states.

The study also highlights a financial aspect: the reduced quantity and quality of cognitive inputs may stem from the overall decline in household income due to mothers’ lost earnings during extended parental leave.

Kalíšková and Bičáková’s study is the first to demonstrate that the policy of extended parental leave, typically designed to enhance child welfare and healthy development, can instead have negative effects on children’s long-term outcomes, particularly when it replaces preschool education. The fact that children from low socioeconomic backgrounds, raised by less-educated parents, are disproportionately affected suggests that the well-intentioned parental leave reform may hinder intergenerational mobility (maintaining educational levels across generations) and deepen socioeconomic and educational inequalities among social groups.