Women on most generous maternity packages most likely to return

Providing generous maternity leave payments increases the amount of time women take off work to have a child, but it also increases the likelihood of women returning to work, according to new research.

Providing generous maternity leave payments increases the amount of time women take off work to have a child, but it also increases the likelihood of women returning to work, according to new research.

The study argues that if the Government can encourage businesses to contribute to a woman’s pension while she takes time off work, it will be possible to have a maternity leave policy that both keeps women in work without affecting their pension rights.

The research by Elisabetta Trevisan and colleagues, to be presented at the Royal Economic Society’s 2012 annual conference today, looks at how the length and the generosity of maternity leave affect the amount of time taken off work, and whether this time off work has an impact on women’s pension entitlements at retirement.

The research uses data from 14 European countries on people’s work history, including time taken off for having children and the benefits they received. The report finds that:

– In the short run, the length of maternity leave increases the probability that women take more time off work. But the more generous the benefit, the more likely women are to return to work.

- In the long run, the detrimental effect of long periods taken off work on pensions is reduced if companies make contributions while the women are off work.

If at least half of the total length of maternity leave is covered by maternity benefits and the companies continue to make contributions to a woman’s pension, the negative effect of time off work on pension income disappears.

The reseearchers conclude: ‘Our results have important policy implications for the optimal design of maternity leave provisions.

‘If part of the leave is covered by imputed contributions, the government can choose the preferred combination of generosity and length of the maternity leave without affecting pension income.’



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