Parental leave and careers: Women's and men's wages after parental leave in Sweden

Persistent gender differences in caretaking and the parental leave length have been proposed as one important reason why the gender wage and income gap has remained stable in Sweden for a long period of time. In this article, we study whether and how parental leave uptake (PL) affects mothers' and fathers' earned income and wages during a period of up to eight years after the first child is born. Focusing on those who had their first child in 1999, the descriptive results based on Swedish population registers show that social transfers compensate for a large part of the loss in earned income for mothers. Multivariate analyses of fixed effect models indicate small wage effects of PL. PL results in greater wage reductions (or the loss of wage increases) for the higher educated than for others. For women, the longer their leaves are, the more their wages suffer. For men, the negative wage effect is more immediate but increases less with time in parental leave, which leads to the conclusion that human capital depreciation most likely is not the main reason for the wage decreases that fathers experience. Instead, it seems that men's leave taking is perceived as a signal of work commitment by employers, given that the negative wage effect appears already at very short leaves.