Effects of the Parental Leave Scheme on Fertility Behaviour in Estonia

Sanan Abdullayev , Tallinn University
Mark Gortfelder, Tallinn University
Martin Klesment, Tallinn University
Allan Puur, Tallinn University

This study investigates effects resulting from the introduction of an income-related parental leave scheme on second and third births in Estonia. In 2004, parents became eligible to a generous PL benefit with a compensation rate of 100% of the previous salary paid during 11 months; in 2008, the payment was extended to 18 months. In addition, parents are entitled to keep the amount of benefit if they space the next child within 30 months following the previous birth. In this study, we pose three research questions. Did the reform shorten the interval to second and third birth? Did the reform have an effect on the quantum of childbearing? Are there any parity-related differences in these effects? We use a longitudinal register-based dataset provided by the Statistical Office of Estonia. We use both descriptive and multivariate methods of analysis. First, we construct duration-specific fertility rates and parity progression ratios for second and third births. Second, we use a cure model (also known as a split-population model). The advantage of the cure model over conventional event history models is the ability to distinguish the effect of the covariates on the propensity to have a next child from their effect on the tempo of childbearing. The results show that there was a clear increase in fertility rates at short durations (a speed-premium effect) in line with the incentives of the reform for both second and third births. The increase seems to extend to parity progression ratios suggesting a positive quantum effect.

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 Presented in Session P1. Postercafe