Paid family leave Policy in California - First, ever implemented in the United States of America

Abstract

In this essay, we examine the effects of a gender-neutral policy that was implemented in California in 2004. The policy, Paid family leave, is the first policy in the US that offers a financial compensation to both parents and consists of 6 weeks of paid leave. The purpose of the thesis, is to examine the policy’s effect on fathers’ hours worked per week last year after the implementation. We use March CPS dataset, which is a cross-sectional micro-level data, between the years of 2002 to 2006 to estimate the effects.

A Difference-In-Difference method have been used to explore the effects of the policy. Though, in order to conduct the method, the key assumption of parallel pre-time trends must hold and is not very likely to be realistic, and therefore we perform a Synthetic Control method. The Synthetic Control method contains of a weighted averages of possible donor pool states, which creates a Synthetic California. The Synthetic California shows a hypothetical situation of the outcome if the policy had never been implemented. The results from the Difference-In-Difference shows a negative and significant effect on hours worked per week last year by the father in California compared to the control. Due to the weak pre-trends in both the Difference-In-Difference and in the Synthetic California, we cannot conclude that the negative result only depends on the policy.