Speaker 1: I'm having God Baby. This episode is brought to you
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Speaker 1: for all investors. Hello and welcome back to Bloomberg benchmarkt
Speaker 1: podcast about the global economy. I'm Tori Stillwell, an economics
Speaker 1: reporter with Bloomberg News and d C, and it is Thursday,
Speaker 1: December tenth. I am with my colleagues inco hosts Dan Moss,
Speaker 1: who has moved to New York, and Akiedo still in
Speaker 1: San Francisco. Hey guys, Hey guys, how's it going. We're
Speaker 1: all super excited about our episode this week, which is
Speaker 1: about the economics of paternity leave. It's one that we've
Speaker 1: been anticipating for a while now. Dandy want to tell
Speaker 1: everyone why I am going to be a father next week.
Speaker 1: The ju date is December fift and I am taking
Speaker 1: three weeks of paternity leave, which is a first for me.
Speaker 1: We thought this was a great time to share a
Speaker 1: little bit and to talk to someone who's studied in
Speaker 1: a serious academic manner the pros and cons not just
Speaker 1: of maternity leave, which is common enough, but paternity leave.
Speaker 1: What's in it for the dads and what does the
Speaker 1: research show about what's in it for the kids. When
Speaker 1: our daughter is a little older, she probably won't want
Speaker 1: me around for three weeks. I've got to cash in now.
Speaker 1: So Dan, our hope is that by the time you
Speaker 1: leave our studio today you are going to be armed
Speaker 1: the best that economics has to say about the next
Speaker 1: few weeks that you're going to be spending with your
Speaker 1: new baby, and that we have Villiam, a Dame on
Speaker 1: the line. He's a senior economist with the O E.
Speaker 1: C D and he leads a team of analysts there
Speaker 1: who are experts on family and children policies. Hello Willam, Hello,
Speaker 1: good evening, How are you doing great? Hi? Hi, thank
Speaker 1: you so much for joining us. Well, let's start with
Speaker 1: some context on parental leave in general, with some particular
Speaker 1: scrutiny on the US. So we had the family and
Speaker 1: medical leave Act of nine, which guaranteed that new mothers
Speaker 1: and fathers and companies with at least fifty employees can
Speaker 1: take up to twelve work weeks of leave that covers
Speaker 1: roughly half the workforce. However, none of that leave is
Speaker 1: paid for anyone, and the fact that mothers getting no
Speaker 1: pay in particular makes the US an outlier among most nations.
Speaker 1: In fact, in a study of a one and eighty
Speaker 1: five countries, only the US and Papua New Guinea provide
Speaker 1: no statutory cash benefits during maternity leaves. So what do
Speaker 1: we know about paid paternity leave in other countries. Um,
Speaker 1: Paid fraternity leave is increasing in quite a few OB
Speaker 1: city countries to the extent that by now about one
Speaker 1: foot of O city countries provide paid leave for fathers
Speaker 1: in one form or another. Well, as you just said,
Speaker 1: in the US, even the maternity leaf is unpaid. Now
Speaker 1: that said, there are many corporations which do pay it.
Speaker 1: It's just not required by law to be paid. No. Well,
Speaker 1: the last year, this time last year, I was in
Speaker 1: the US looking at a different paid leave models. There
Speaker 1: are paid leaf models employers. Some employers provide paid leave,
Speaker 1: but then they often provide paid leave to the workers
Speaker 1: they would like to keep. Most which means that some
Speaker 1: high flyers or very skilled people will get the option
Speaker 1: to vail of a couple of weeks have paid leave,
Speaker 1: but not everyone does, and in particularly low income workers
Speaker 1: who might be relatively easy to replace in the job
Speaker 1: they're doing, do not get income support, which means that
Speaker 1: their child doesn't get a great start in life. Some
Speaker 1: states in the US also provide paid leaves in different forms.
Speaker 1: There is short term or Temporary Disability Insurance, which provides
Speaker 1: paid leaves in five er States, and Puerto Rico and California,
Speaker 1: and New Jersey and Rhode Island have paid family leaves
Speaker 1: for both men and women. For our listeners out there,
Speaker 1: the o e c D is kind of like this
Speaker 1: elite club rich nations and the o e c D
Speaker 1: average for paternity leave is nine weeks at sixty of
Speaker 1: full pay um, and the US, at least on a
Speaker 1: federal level is zero. Villain. You know, I was looking
Speaker 1: at these o e c D stats. I saw that
Speaker 1: Japan and Korea offer some of the most generous um
Speaker 1: paid paternity packages to their fathers, and I was really
Speaker 1: surprised to see this because you know, I grew up
Speaker 1: in Japan. Um My, I'm Japanese. I spent half my
Speaker 1: life there and it's such a conservative country when it
Speaker 1: comes to gender norms. Um. So I'm assuming that it's
Speaker 1: a case that not all Japanese fathers actually take this
Speaker 1: benefit even though it's available. You're right, absolutely not. But
Speaker 1: Japan and Korea are very interesting countries and there are
Speaker 1: a good example of, um you know, the different reasons
Speaker 1: governments have to introduce paidly for fathers. Basically, what what
Speaker 1: is one of the main drivers of policy development in
Speaker 1: both these countries is to persistently low fertility. Right, so
Speaker 1: for years the government has been trying to design policy
Speaker 1: measures that would help increase fertility rates, and they think
Speaker 1: one of those. Well, the thing is, one of the
Speaker 1: main issues young Japanese men and women have when they're
Speaker 1: thinking about forming a family is that they face a
Speaker 1: very difficult issues in terms of reconciling work and family commitments.
Speaker 1: Because the working hours in a regular job in Japan,
Speaker 1: as you will know, are very long. You commit yourself
Speaker 1: to the firm and in return you get um lifetime
Speaker 1: employment and increased renumeration over the life course in a
Speaker 1: seniority place system. Now, men and women cannot combine their
Speaker 1: work practices with with a family life. And in the past,
Speaker 1: when when the male breadwinner model was widely accepted, that
Speaker 1: was no problem. But nowadays in Japan, young women are
Speaker 1: more likely to have an educational degree high tertiary education
Speaker 1: degree than young men, and they want to pursue a
Speaker 1: labor marked career just as the young men do, and
Speaker 1: it's very difficult to combine that with having children. So
Speaker 1: what the Japanese government is realized is we have to
Speaker 1: help our younger people. And one way of helping women
Speaker 1: and men are combining work and familiar life is giving
Speaker 1: them the right to pay paternity leads. It is relatively new.
Speaker 1: Take up among in Japanese men is very low. It's
Speaker 1: about to p and two of our colleagues in Bloomberg's
Speaker 1: Tokyo office have just taken paternity leave now, having said
Speaker 1: that they are both expatriates. Is there any evidence that
Speaker 1: these relatively generous provisions in Japanese law are having the
Speaker 1: desired policy effect? The demographic tied there seems like a
Speaker 1: difficult thing for just one policy to swim against. I
Speaker 1: guess the question could apply to a career as well.
Speaker 1: For this particular measure. I think that it's too early
Speaker 1: to tell whether it has an effect in future on
Speaker 1: the on the demographic trends, but I think that the
Speaker 1: realization in both Japan and Korea is growing that it's
Speaker 1: not so much that they have to change their social
Speaker 1: policy because they have already made a lot of changes
Speaker 1: in that they also have to change their workplace practices
Speaker 1: and that is much more difficult to accomplish. This is
Speaker 1: all fascinating. After this break, we will go through the
Speaker 1: pro and con lists for Dan taking a long paternity
Speaker 1: leave after award from our sponsor. What do traders want
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Speaker 1: dot com futures options and swaps trading involves risk and
Speaker 1: may not be appropriate for all investors. Ultimately, this show
Speaker 1: really is all about me. Is there any statistical evidence
Speaker 1: that men who avail themselves of paternity leave suffer, at least,
Speaker 1: according to some statistical models, a decline in earnings over time? No?
Speaker 1: Intuitively yes, in statistically no, because there is not a
Speaker 1: long time series of UM in most countries of men
Speaker 1: that have taken leave on on a large basis, So
Speaker 1: you you you don't get a large enough statistical sample
Speaker 1: over a large enough period to look at that. There
Speaker 1: are some studies in Sweden where parental leaf has been
Speaker 1: been taken for a longer period of time. The first
Speaker 1: period of parental leave was introduced UM in the the
Speaker 1: father month was introduced, and there you have some studies
Speaker 1: on the effect of earnings on on your own earnings
Speaker 1: and on spouses, but the amount of studies on that
Speaker 1: particular topic over time is very small. I'm a guinea
Speaker 1: pig in the US, definitely. So we have all this
Speaker 1: context that we just discussed. But let's go through the
Speaker 1: economic research to say, or at least to come up
Speaker 1: with some good idea of how long a leave Dan
Speaker 1: should personally take. Will go through the case for him
Speaker 1: to be careful and limit the length of his leave,
Speaker 1: and then we'll go through the case for him to
Speaker 1: take as much leave as he possibly can. Right, so
Speaker 1: you know the case for Dan to be a little
Speaker 1: bit careful in taking a longer leave. Earlier, we heard
Speaker 1: from Villain that there isn't a lot of research out
Speaker 1: there that shows what the career implications are of parents
Speaker 1: who take a longer leave, but we have some studies
Speaker 1: and um, at least according to one study out of Sweden,
Speaker 1: this is by Ellie and Johansson um, mothers who took
Speaker 1: a longer leave got paid four point five percent less
Speaker 1: and fathers who took a longer paternity leave got paid
Speaker 1: seven point five percent less. That was four years down
Speaker 1: the road, So it's kind of like a medium term effect.
Speaker 1: But like we said, the research out there is like,
Speaker 1: it's pretty is a small sample. Economists are still trying
Speaker 1: to learn about this villain. If it is the case
Speaker 1: that parents end up earning less down the road when
Speaker 1: they take longer leaves, how do you think that mechanism works.
Speaker 1: Why do you think that happens? Well, it depends a bit.
Speaker 1: It depends on various factors. One is the the average
Speaker 1: the duration of your spell of leaf. In any country
Speaker 1: like Sweden, the overall paid leaf period is around a
Speaker 1: year and a half. And if you're out of the
Speaker 1: work force for out of the workplace, i should say,
Speaker 1: for that long period of time, that affects your your skills.
Speaker 1: And if you have two children in a rapid succession,
Speaker 1: that means that you're out of the work place for
Speaker 1: quite a long time. So it becomes the effect becomes
Speaker 1: even bigger for man. The effect in the in this
Speaker 1: particular Swedish studies is bigger because they're probably fewer men
Speaker 1: who take paid leave for a prolonged period of time.
Speaker 1: But that is to some extent, you know, the proof
Speaker 1: of the of the pudding is in the eating. At present,
Speaker 1: men women are the most common new leave takers, and
Speaker 1: as long as that is the case, there might be
Speaker 1: employers who feel that they should invest less in women
Speaker 1: or otherwise not promote them in their career path. UM.
Speaker 1: So as there are fewer men who around who take
Speaker 1: a father's leave, the ones that do um are more
Speaker 1: punished between brackets for for their leave taking behavior. So
Speaker 1: the wags penalty is larger. We just ran through the conents.
Speaker 1: What are the pros or if we're making the case
Speaker 1: for Dan to take more time, what should we think about.
Speaker 1: I think the one that comes to me most immediately
Speaker 1: is just your better bonded with your child and that
Speaker 1: leads to better life outcomes for them. That is um
Speaker 1: one of the findings I mean, and that's also one
Speaker 1: of the reasons why governments are investing in in paid
Speaker 1: parental leave, because it invests at the very beginning of
Speaker 1: life when you can change behavior of of the father
Speaker 1: and your most effective in that sense. The study we
Speaker 1: have done in on this I think best is out
Speaker 1: um that you know there are positive effects on cognitive
Speaker 1: child cognitive development if farther a stake leave for a
Speaker 1: longer period. That's just an amazing finding that your your
Speaker 1: child might end up potentially a little smarter if you're
Speaker 1: if the father takes more time off. It's it's it's
Speaker 1: about the bonding. It's about from what we can see,
Speaker 1: what the evidence suggests is it's about not even so
Speaker 1: much the length of time as the quality of time.
Speaker 1: So when it comes to personal contact and interaction with
Speaker 1: with the child, but that that is just one player
Speaker 1: in the game. I don't know whether than his partnered.
Speaker 1: So for him, it would also matter what his partner
Speaker 1: is doing, whether his partner is at work, whether him
Speaker 1: taking a longer time facilitates his partner to to stay
Speaker 1: in touch with work as well. I mean, there's all
Speaker 1: sorts of considerations that that I do not know. The
Speaker 1: level of earnings is an portant consideration also of his partner.
Speaker 1: I mean, in terms of parents taking leave. From an
Speaker 1: economic perspective, it makes sense if the parents who earns
Speaker 1: the least of the two um takes more leaves, and
Speaker 1: unfortunately that's that's often women, and that's why that's this
Speaker 1: trade off. But it's it's sort of like a negative
Speaker 1: cycle here. If women are consistently the ones making lesser,
Speaker 1: they're taking more time off, so it's hurting their potentially
Speaker 1: hurting their career outcomes, their earnings all over again. It's
Speaker 1: just this cycle that gets perpetuated. Yeah, and it's very
Speaker 1: hard to break. But what you see is that among
Speaker 1: younger couples it's much more normal between invoted commas um
Speaker 1: to to try and define the cat tasks more equally.
Speaker 1: So there is definitely change in the air and the
Speaker 1: other things. Of course, like I said, if you have
Speaker 1: more young um female professionals, the chances that they UM
Speaker 1: earn more is also elevated. Hence the chances that they
Speaker 1: also in the household bargaining will be in a stronger
Speaker 1: position and will will push successfully for a better sharing.
Speaker 1: What I'm hearing is millennials, it's all up to you,
Speaker 1: don't screw it up. I think that you you raised
Speaker 1: a good point earlier. Also, though it's sort of this
Speaker 1: culture has to be set from the top. If if
Speaker 1: younger workers, if lower level workers see management taking paternity leave, um,
Speaker 1: they might feel that it's more acceptable for them to
Speaker 1: do so as well, which is why it is so
Speaker 1: important for people like Mark Zuckerberg and people like Dan
Speaker 1: Um who is an executive editor here to take that
Speaker 1: time off. In the eyes of proponents of paternity leave,
Speaker 1: the leadership is come play an important role. It's also
Speaker 1: often senior executive are are are a bit older, so
Speaker 1: it's not just senior leadership, but it's also middle management
Speaker 1: which which come play an important role. And I mean
Speaker 1: I think that for for middle management that they should
Speaker 1: also encourage their staffers to to to take leave if
Speaker 1: they can, and UM, the system in within companies should
Speaker 1: might might give incentives to to middle management to encourage
Speaker 1: to do so. Looking from from from an OCD perspective,
Speaker 1: the fact that the UH, the the the US is
Speaker 1: the is the one who is the country without paid leave,
Speaker 1: but that there are states within the US, like California,
Speaker 1: like New Jersey, like Rhode Island who actually do provide
Speaker 1: paid family leave on an individual basis. Fathers can take
Speaker 1: it and fathers do take it in California, and increasingly
Speaker 1: so over the last ten years, the California and economy,
Speaker 1: the New Jersey economy hasn't ground to hold. Um. It
Speaker 1: is not that difficult or that expensive to to run
Speaker 1: a paid family leave or paid parental leave system. So
Speaker 1: UM and I think those are very important points to
Speaker 1: get across to American policy. MAXs Well, thank you so much,
Speaker 1: Dylan for joining us. It's been great to have you on.
Speaker 1: It was my pleasure to enjoy a couple of nights
Speaker 1: sleep you can still get. Yeah, thanks Will, thanks again
Speaker 1: for listening to Bloomberg Benchmark. At least Aki and I
Speaker 1: will be back next week, by which point then maybe
Speaker 1: cradling his newborn baby in his arms. He's naming it
Speaker 1: Victor Area, He's naming it after me. Don't let him
Speaker 1: tell you differently. So you might not hear from Dan
Speaker 1: for the next few episodes, but stay tuned and you
Speaker 1: can find us on Bloomberg dot Com, iTunes, SoundCloud, Stitcher,
Speaker 1: Google Play, pocket Cast and all the other platforms. And
Speaker 1: while you're there, please take a moment to rate and
Speaker 1: review our show and let us know what you thought
Speaker 1: of the show. You can reach us and follow us
Speaker 1: at Twitter, at Daniel Massti ce Tori Stillwell and at
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