Should we have paid maternity leave?

Recently, we had a policy discussion forum about the issue of whether Australia should follow most of the rest of the OECD and introduce the right to paid maternity leave. For the full slides, see here.

During the discussion I introduced the topic of paid maternity in the context of the recent proposals by the Democrats and the Greens to guarantee women 14 weeks of paid maternity leave, with the payment being at the level of the minimum wage and provided by the government. Such a scheme would apply to about 100,000 women a year which would make the cost close to half a billion a year. From an economic point of view, the relevant question to ask is whether there are any market failures at work that would warrant such an appeal to the public purse.

Alison MacIntyre argued this scheme does make sense from an economic point of view because of the benefits to the rest of society of having children to perpetuate the nation. The scheme is an effective subsidy from families without children (who pay part of the tax population paying for the scheme) to families with children. Since private employers do not take such beneficial social incentive effects into account they are not going to be in favour of maternity leave, and indeed would discriminate women if they as employers would have to pay for such a scheme. Private individuals deciding to have kids do not obtain the full societal benefits of having kids. Hence Alison argued we needed a government funded scheme to bribe people into having more kids, or at least to help them out. Most other countries indeed have such a scheme, varying from 12 weeks to a whole year of paid maternity leave. Alison pointed out that women’s groups support it and many large businesses already have such schemes anyway.

Ben Ives on the other hand argued we should not have a scheme like this. His main argument was that having children strongly disrupts the worker-employer relationship, putting an unfair burden on employers of their employees taking time off to care for children, quite apart from the actual wage cost of a maternity scheme. The right to return to the same job when pregnant would furthermore add unfair costs on the employer of training temporary replacements who would then unfairly have to be gotten rid off when the leaver returns. Ben supported the idea that employers should be able to discriminate on the basis of expected pregnancy since this entailed a relevant business cost, and that in general the government should not try to achieve social outcomes (more kids) by labour relations regulation. Ben argued that the incentive to have more children was going to be quite small and probably only relevant at the bottom end of the wage distribution. Finally, Ben made the argument that there was no pressing reason to want a higher population in the first place and that we already have enough kids in Australia.

What the discussion made chrystal clear is that kids are a nuisance from the point of view of the businesses hiring the parents and that any wish to increase the child bearing of workers is going to have to recognise that businesses have little incentive to work along with such schemes. Ben is probably spot on in his assertion that most selfish employers have good reasons to shun people who might get pregnant. Should we as a country ever get really worried about low fertility rates therefore and also want the women with kids to be able to be competitive in the world of work, heavy interference in the worker-employer relation when child bearing is involved is inevitable.

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72 Responses to Should we have paid maternity leave?

  1. Niall says:

    Personally, I see the question as ‘Why Shouldn’t We Have Paid Maternity Leave?’ Fornication and procreation are real. Work is something we created to fill in the time between fornicating and procreating. Oh, and it helps pay for the proceeds of fornicating and procreating.

  2. Vic Coleman says:

    The other side of the story re paid maternity leave is where the employer employs someone on a temporary basis to cover maternity leave, only to have the “new mum” decide not to come back to work when maternity leave expires … and out in the real world, someone in a short term job is not always looking to make it a permanent arrangement. To the employer , it is all just a pain in the butt …. if it is good for the country …. fine, but the country should pay for it, not the employer.

  3. Dave Bath says:

    While I think too many kids will burden a nation (too many water and energy users), if kids come, it is more important for them to get a good start (cheaper for the government in the long run).

    I discussed paid paternity leave back here, because there had been an interesting VoxEU (a group blog/publishing forum for senior economists) paper here that argued paid paternal leave improves gender wage equality by increasing female employment and wages. The VoxEU paper went by a couple of titles depending on how you navigated, but one of the titles was "Gender, medicine and papa leave".

    BTW: I was the sole carer when my daughter was very young – working full time – (baby on chest), and would have LOVED to be able to take paid paternal leave: my ex was not in regular employment at the time, and she was in hospital most of the time after the birth.

  4. Dave Bath says:

    Forgot to mention that the logic of the feminist argument for paid paternal leave might result in employer preferences for hiring homosexuals are they are less likely to have kids!

  5. harry clarke says:

    Your lengthy argument does not articulate the external costs of being able to ‘perpetuate the nation’. What are these costs? If everyone elected to have no children what external costs are imposed on current people?

    Obviously if society does believe it is socially desirable to have kids then society should foot the bill – not the unfortunate employer – who will sensibly discriminate against young women if they look like getting up the duff.

  6. Paul Frijters says:

    Dave,

    “Forgot to mention that the logic of the feminist argument for paid paternal leave might result in employer preferences for hiring homosexuals are they are less likely to have kids!”

    an interesting & valid argument which you hear a lot from economists when they discuss this sort of thing (usually in the pub). You’d similarly think that any ‘certificate of infertility’ would be worth something on the labour market. I guess that social norms stand in the way of doing this explicitly but that employers might take implicit cues to that effect into account.

    Harry, you are quite right that the blog does not articulate what these national benefits were but simply summarised them by talknig about the perpetuation of the nation. These benefits are notoriously hard to measure, but would include things like having someone who speaks your dialect look after you when you’re in an old care home, the idea of having your culture survive and prosper when you’re gone, having a minimal defense force to ‘guarantee your property rights’, and that sort of thing. From a ruthlessly classical economic point of view there is no particular benefit to you of other people’s kids. Indeed, they just eat up tax receipts while only supplier labour that you could have imported instead.

  7. Jennifer says:

    I find that most discussions of the benefits or otherwise of maternity leave tend to ignore the long term effects, which are very large.

    If mothers are effectively shunted out of the workforce when they become pregnant (because their jobs are not available to them when they come back, unless they come back too quickly) then the effect is not just about whether or not you have an employee for the next year, or about the children, the future taxpayers.

    That mother loses a substantial future cash flow – a good proportion of her income until retirement age. And the nation loses the taxes on that income.

    If, on the other hand, the nation (and the mother) are prepared to make a medium term investment in providing flexibility for her to maintain her skills and experience until she is ready for full time work, then the long term position will be a much more productive work force. But 5-10 years out of the workforce entirely will erode the value of the investment that the mother and the nation has already made.

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  9. observa says:

    The equity question arises as to whether different mothers deserve different pay on paid maternity leave. The same equity problem arises with casuals. What should happen in the case of a new employee who is 3 months pregnant when the employer takes her on? Usually she is taken on under 3 months probation. Would she survive that? Would the employer be noble enough to take on a 7 months pregnant woman? All this and the general aversion to taking on child bearing age women, unless in high demand occupations, would suggest fallback on the public purse and the same rate for all, much like sickness benefit payments.

  10. observa says:

    “If mothers are effectively shunted out of the workforce when they become pregnant (because their jobs are not available to them when they come back, unless they come back too quickly)”

    A good argument for a very flexible hiring and firing regime by both parties (bearing in mind it is by far the majority of workers who regularly sack their bosses). That way employers are very relaxed about taking someone on and full employment helps the employee too.

  11. Yobbo says:

    Paid maternity leave is nothing more than a subsidy paid by the childless to the breeders.

    If you priortise your family ahead of your job, You shouldn’t expect to keep it just because babies are cute.

    If I decide to take a year off work to climb mount everest, I don’t get paid leave and a guaranteed position waiting for me whenever I feel like coming back. Having a kid is no different.

    If the person in question is so vital to the business that they have no choice, then that’s fine. But that would happen anyway with no government interference.

  12. paul frijters says:

    yobbo, you clearly dont buy the argument that every mother should have a kid for the country (in which case the country should pay including the employer), do you? :-)
    Jennifer, sure, having a kid is a very expensive decision. Indeed, they are so expensive that it is clear people are not having them for financial benefits but for consumptive reasons. The loss of future tax return if the mother doesnt return to work is a difficult one to assess as an externality though:
    a) if she doesnt return, she’s most likely involved in home production which can be just as good from a societal point of view. Unmeasured GDP still increases wealth. Its only bad for wealth if the mother doesnt return and doesnt do something equally productive with her time.
    b) if she does return, the paid maternity leave is simply a transfer from one group without the other.

  13. Tim Quilty says:

    If you must have subsidies for having kids, why not make it a tax subsidy along the lines of super, where a women can put 20%(or something) of her pre-tax income into a maternity account to be drawn out over a year or two after having a kid? Should be more effective in getting high income earners to have kids then a $4000 baby bonus or a paid maternity leave at a low rate. If after years of saving no kids are had, the money could be folded into super…

  14. Anthony says:

    “kids are a nuisance from the point of view of the businesses hiring the parents ”

    I thought there was evidence showing employers prefer hiring married men with children and/or that men with children are better/more productive/harder working employees. Perhaps you meant to say ‘caring for kids’ is a nuisance from the point of view of the businesses hiring the carer – usually a woman.

    Also, at any point in time paid maternity leave schemes might represent a subsidy from families without children to those with children or as el yobbo so pithily puts it from ‘the childless to breeders’. But the two groups aren’t mutually exclusive. Over time many of the childless become breeders, families without children become families with children, so aren’t we simply seeing a lot of life cycle redistribution akin to a social insurance type scheme?

  15. Nico says:

    Anthony, the social insurance point you make is interesting. I’m just wondering though, given the enormous amount of government subsidy that families with children receive, in every sense, does it actually all break even in the end? Do the incentives for women with children to remain in the workforce actually lead to an increased level of productivity? Do the children born grow up to become productive enough citizens to compensate for the subsidies which funded their early existence?

  16. Anthony says:

    Nico, I’m sure that under the current system of subsidies to families it doesn’t “all break even in the end” because the life cycle redistribution occurs in a system that also relies on means testing of family benefits. Thus lifecycle redistribution between households with and without children cuts across a system that is also concerned with redistribution from well-off households to less well-off households. I remember figures from the 1990s suggesting about 40 per cent of the redistribution effected by the Australian welfare state was lifetime redistribution. In social insurance welfare states the proportion would be considerably greater, but even those states involve an element of vertical redistribution.

    I suppose my point was that a childless person might be quite happy to subsidise a ‘breeder’ if they knew that in turn they would be subsidised when they started breeding (or that the breeder’s children would grow up and subsidise the childless person in their old age).

    By the way, I suspect my notion of lifetime redistribution is Peter Saunders’ bete noire of welfare ‘churning’?

  17. James Farrell says:

    There are three distinct aspects to childcafre subsidies.

    Employer-provided or employer-subsidised child-care is properly regarded as a wage premium using second-order price discrimination. It makes sense in various situations. A private sector employer might us it to retain productive workers, in preference to paying higher wages to everybody, which would be more expensive. The public sector should use the same approach, especially with nurses, but also with teachers. But in both cases the decision should be based on profit or cost-benefit considerations for the enterprise in question.

    State-subsidised child-care is a valid form of income distribution if means-tested. The rationale for subsidising poorer working parents rather than poorer parents in general would be that the low-income parents who work are investing in skills that will make them employable and bring them higher wages later when their children are of school age. Implicit in such resoning is the assumption that low-income households, if subsidised for breeding per se, would not be sufficiently rational decision to choose the work option voluntarily.

    Universal state subsidised child-care is a different story. It is a general redistibution from childless and non-working people to workers with children. Unless one can identify a positive externality associated with the specific choice to work while one’s children are young, there doesn’t seem to be to be any justification for it. It may in fact be middle class welfare.

  18. conrad says:

    “suppose my point was that a childless person might be quite happy to subsidise a breeder if they knew that in turn they would be subsidised when they started breeding”

    I’m sure there are a lot of qualifications on this. Having been lucky enough to work in France now and then, I couldn’t help but notice that there are such huge family subsidies (and other stuff too) that it is hardly even worth your bother working if you don’t have kids, excluding long term career reasons. It therefore doesn’t surprise me that, despite the huge cultural barriers (speaking French), lots of young people now move to the UK and elsewhere (the French argue about the extent of their brain drain — but I’m not aware of any figures), and it is also unlikely that France could ever have an immigration program similar to that of, say, the US where they attract large numbers of smart and industrious people, even if they needed it(which, given the state of their universities, is probably going to be likely). Who would ever come if they know they they could earn so much more in another country?

    I’m not saying maternity leave in Australia is the straw that is going to break camel’s back, but encouraging the people who can most easily leave (or not come) to your country (i.e., young well educated professionals), is not exactly a recipe for future success.

  19. conrad says:

    Sorry the last paragraph should read:

    Im not saying maternity leave in Australia is the straw that is going to break camels back, but encouraging the people who can most easily leave to leave (or not come) to your country (i.e., young well educated professionals), is not exactly a recipe for future success.

  20. Backroom Girl says:

    I think it is important to separate the question of paid maternity leave from other issues about family assistance, child care subsidies, etc. In my view, they are not really the same thing, even if the same people might benefit from them.

    If Australia had a system of social insurance, like most of the rest of the developed world, would we even be having this conversation? Under social insurance schemes, maternity is one of the contingencies that is usually covered, like illness or disablement, unemployment, widowhood, etc. It doesn’t seem to matter that not all people end up having paid maternity leave – in the same way that not all people end up drawing unemployment benefits or disability pensions.

    Presumably we all accept that mothers can’t or shouldn’t work for some period of time around the birth of a new baby. They may not be medically ill but that doesn’t mean that they are fit for work either (not to mention that they have a little someone relying on their care). Unfortunately, in the way we have set things up in Australia, employers are usually responsible for providing paid leave to employers. But while some larger employers with skilled female workforces are in the position to provide paid maternity leave, many smaller employers are not and we don’t want to give them a reason to discriminate against women of childbearing age, so it seems that most people also accept that requiring all employers to provide paid maternity leave is not a viable option.

    It seems to me that there are two possible ways to go if we want to provide some form of paid maternity leave to all employees. One, which I believe some academics have suggested, is to approach it in a similar way to worker’s compensation, funded by some form of payroll levy on employers (but presumably not with risk-based premiums). The other approach would be to provide a government-funded ‘safety net’ through our means-tested income support system, in the same way that we do for illness and disability that isn’t covered by paid sick leave or worker’s compensation. Some women are already supported in this way, but the majority of women having babies (who have partners who work) don’t qualify for assistance. So if you wanted to make the entitlement generally available, you would need to make it free of a test on the partner’s income.

  21. Backroom Girl says:

    In the end, I don’t think payments under an Australian paid maternity leave scheme should be earnings-related, unless they are funded by employers. It would be in keeping with the Australian tradition of providing a targeted income support safety net to make payments available at the same rate that they are provided for other contingencies like unemployment. The only difference might be that, for some period, eligibility would be tested only on the woman’s own income (including any maternity pay from her employer), rather than the couple’s joint income.

    It would be possible to limit such a scheme to women who had been in employment, but in the end this would probably present quite a number of practical difficulties eg Would there have to be a certain employment or earnings threshold? If so, how much? What about people who had become unemployed before they reached the point of eligibility for maternity pay? In the end it might be simpler to just cover all mothers giving birth, even those who were not working immediately before, on the assumption that each birth involves some level of earnings foregone.

  22. Chris Lloyd says:

    Ben made the argument that there was no pressing reason to want a higher population in the first place and that we already have enough kids in Australia. Ben for PM!

    I find it depressing and appalling that there are public utterances in favour of a higher population. You hear it from right and left. The left say we need more population because to suggest otherwise leads to the consideration of limits on immigration. And of course immmigration is good by definition, as well as being a just penance for past sins.

    From the right, it is just growth fetish pure and simple. If there are labour shortages in certain areas then this is a failure of education and planning. Temporary visas can tide us over in the mean time. In any case, there are more important things than an extra point of economic growth. Like watering my garden and being able to drive to work in less than an hour.

  23. Backroom Girl says:

    Chris, but even a stable population needs babies to be born to replace itself. I really don’t think that the main reason for advocating paid maternity leave is to increase the population (though no doubt that makes a good debating point by those against it) – rather, as I said, that it might be appropriate to include taking some time out of the workforce to have a child (which in the end has some benefits for society as well as for the parents, not to forget the child itself) among those contingencies that are compensated in some way for income foregone.

    I have noticed that the most vociferous opponents of paid maternity leave are almost universally male – who funnily enough don’t usually face quite the same range of choices and decisions as women do in this area.

  24. Helen says:

    Paid maternity leave is nothing more than a subsidy paid by the childless to the breeders.

    Yobbo seems to have an aversion to breeding. Words cannot express how happy that makes me.

  25. Backroom Girl says:

    Helen

    I imagine he thinks that paid sick leave is just a subsidy from the healthy to the sickly, too. Clearly not fair.

  26. Anthony says:

    Touche, BB. I think it was the US social policy commentator Martha McCluskey who once commented “We all live subsidised lives”

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  28. Patrick says:

    Although I understand Helen’s general sentiment that the likes of Chris Lloyd should be consistently anti-growth and stop consuming, now, in Yobbo’s defence I think he was referring to state-subsidised maternity leave. I don’t believe the State subsidises sick leave for anyone besides government employees.

    As it happens, most people think I’m pretty far out on the right, but my arguments for more immigration are based around more than just ‘growth’ (although having tried decline, I quite like growth). I think there are a couple of reasonably strong moral arguments, at least one non-‘growth’ economic argument, and finally a couple of cultural arguments.

    Conrad, it isn’t really the family subsidises that are bankrupting France and driving the ‘yoof’ (funny how much everyone seems to want them when they are going – countries and parents alike). And your average young professional doesn’t mind that so much – what your average young professional in France lusts after is ‘un contrat anglais‘ – or the opportunity to work your arse off for a ridiculous amount of money. So much so predictable. The surprising thing is listening to all the proud parents ‘ah, Marie, you know, she moved to London, she has an English contract now‘.

    Speaking of which, France actually came close to an Ayn Rand moment last year, when a few thousand surgeons threatened to fly to England if they didn’t get paid better – it would have been deliciously ironic if Atlas had finally shrugged, in France.

    For what it is worth, although my employer already offers it, I think paid maternity on a social insurance basis is a pretty good deal. I would be happy with it being family-means tested, too, albeit generously. By no means should payments be earnings-based – that is a farce.

    I think that there are a lot of benefits (externalities, mainly) from having mothers in the workforce.

  29. James Farrell says:

    My previous comment, about subsidising childcare, can be atrributed to a brain spasm. It’s a related issue but, as Backroom Girl gently pointed out, they are different.

    Subsidised maternity is a form of welfare in kind, and the analysis should be basically the same as with food stamps.

    The first question is whether it makes sense to target the group in question. There’s an argument for subsidising babies, on grounds of a national defense. But then you would just pay a baby bonus to every woman who has a baby, whether she has a job or not and whether she takes leave or not. Why would you specifically reward working women? It’s the same question you’d ask about subsidising childcare. The only reason I can think of is to dissuade the woman from taking a risk that she will lose her link to the workforce (contacts, skills, confidence), which might stop her from getting back in later when she’s ready. The implicit assumption is that she isn’t aware of the risk, isn’t able to optimise on her own behalf, and needs to be kept at work for her own good.

    The second question is how to justify restricting how the transfer is spent. On grounds of consumer sovereignty you would pay all working women an allowance for three months after they give birth, and allow each to choose for herself whether to spend it on a replacement for herself or on a nanny while she stays at work. By stipulating that she has to take time off, the government is making a judgment that it’s good for mother and baby to have bonding time, just as it’s good for the welfare recipient to buy food rather than booze.

    I’m not a libertarian, and I don’t mind a bit of paternalist social engineering here and there, but I think we need to be very explicit about why we do things, and obtain evidence that they are necessary and effective.

  30. Yobbo says:

    Yobbo seems to have an aversion to breeding. Words cannot express how happy that makes me.

    I don’t have an aversion to breeding. I have an aversion to people who think the world somehow owes them something because they decided to have a kid.

    Having a kid is a lifestyle choice like any other. As I said, we should no more subsidise people who have kids any more than we should subsidise people who take time off work to go Surfing in Indonesia, or go to Germany for Oktoberfest.

    With today’s medical technology having a child is a choice, it’s completely avoidable. So employers should be able treat like all other choices. Stay at work and keep your job – or go on a holiday for a year and lose it.

  31. Nabakov says:

    Paid maternity leave is nothing more than a subsidy paid by the childless to the breeders.

    I’m cool with that. I’m in the top tax bracket and have no intention of having kids myself. But I also understand that no kids equals no future. For anyone. So I’m quite happy to subsidise (I guesstimate a national maternity leave scheme would account personally for less than 1% of my taxes) those that do the necessary for my community’s future. In return I’ll never have to change a dirty nappy at 3am. Seems like more than a fair trade to me.

    Having a kid is a lifestyle choice like any other.

    Bet yer glad your parents made the appropriate choice about their lifestyle.
    It’s not about lifestyle, it’s about life itself. And what’s being debated here is how wealthy societies like ours could minimise the burden of those that “choose” to maximise the future of their societies.

    Only a young male libertarian could assume that helping breeders better manage their spawn is just another scam impinging on their vision of a better future.

  32. Nabakov says:

    I find it depressing and appalling that there are public utterances in favour of a higher population.

    Well I want more people too. I’m bored shitless by the current lot and I suspect it’s mutual. We’ve all heard each other’s jokes too many times.

  33. Yobbo says:

    Only a young male libertarian could assume that helping breeders better manage their spawn is just another scam impinging on their vision of a better future.

    People have been successfully reproducing for millions of years without having to be encouraged to do so by the government.

  34. Backroom Girl says:

    Thanks for that contribution Nabakov. If I have to read one more time about how having a child is equivalent to buying a new car or going to Germany for Oktoberfest (though I must admit that is a new one), I think I will just scream. I’m just grateful if people who think that way decide not to have children, really. What it would be like to be their child doesn’t bear thinking about.

  35. Nabakov says:

    People have been successfully reproducing for millions of years without having to be encouraged to do so by the government.

    Actually the current thinking is that Homo Sapiens became a distinct species around 200,000 years ago. And if you look at all successful Homo Sapiens colonies since then, I think you’ll find their communities both economically and socially worked in and around those on breeding duties.

    I can just see you on the African savannah around 120,000 BC whinging that the pregnant chicks scored the wildebeest liver and not you, even though it was your big shouting that turned the animal towards the cliff and waiting stones and clubs below.

    That’s the trouble with you die-hard libertarians – no planning ahead. You just assume the future will provide, apparently unaware that your parents and several thousand generations before them agreed in one way or another to co-operate on building this thing called society. And which is built on the bedrock of “women and children first.” Without your ancestors going along with this basic species pact, you’d barely be Homo Erectus now let alone Sapiens.

    But really Sam, if you’re so worried about those bloodsucking ATO bastards (I’m in the middle of a highly entertaining dispute with ’em now) giving our money to undeserving breeders then I suggest there are worse things to worry about here than maternity leave. The whole defense and broadband schmoozles for starters. That’s over $100 billion pissed away by Canberra over the past decade.

    Looking at Canberra, I do wonder sometimes just how far Homo Sapiens did spread from Central East Africa.

  36. Backroom Girl says:

    In the end, paid maternity leave (however you go about doing it) is about enabling women to be mothers as well as workers, rather than having to choose one or the other. It helps women to have children at a time in their life when financial pressures are usually at their greatest (ie most people have high mortgage repayments). And, especially when provided by the employer, it does have an explicit aim at getting women back to work sooner rather than later.

    Oh, and only a man could equate staying at home with an infant with going on holiday for a year. Not that there aren’t many delightful moments, but still …

  37. Patrick says:

    broadband schmoozles

    I would happily give every cent this silly country has spent wanking over broadband to pregnant women. I’d happily give Telstra to a horde of 54 weeks pregnant women with two young kids in a heatwave, in fact.

  38. Chris Lloyd says:

    Backroom Girl,

    I am not against paid maternity leave, just the population argument being used for it. It may be true that males are over-representated in those opposing paid maternity leave. Those planning to ahve no children are also against it. Not a big surprise that sections of the population who do not benefit (or benefit less) from a government payment are less likely to be in favour of it.

    You also said “Paid maternity leave is about enabling women to be mothers as well as workers, rather than having to choose one or the other.” So can you define the objective more clearly. Are we aiming for more children to be born or not? If so, I am against. Are we aiming for a larger proportion of mothers to return to the workforce sooner? If so, then you must believe that the parental role is less important than what they do in the office. But doesn’t the opportunity cost of the salary take that into account? those on k$200pa will presumably get back in the office quicker.

    Apart from the population argument whose objective I reject, I cannot really see the obvious market failure here. Jennifer (comment 7) sounds like she is making some sort of case, but it need to be fleshed out. The only obvious externality I can see is that society benefits greately from parents who do a good job bringing up their kids. And the parents do not get paid for it. But that is an argument for parental payments for all and for more than 3 months.

    Which leads on to the more practical issue of how much should the payment be and to whom? James pertinently asks whether non-working mothers should get the payment. One might also ask whether those on k$200pa should get a payment, since the opportunity cost of not working is so huge that the payment will have no effect. Unless we are suggesting that the payment be a proportion of previous salary.

  39. Backroom Girl says:

    Chris

    I understand that the origin of this discussion was in an economics seminar, but it will probably not surprise you to know that I don’t see this as just an economic issue, which only needs to be addressed if market failure can be demonstrated. I’ll try to respond to your issues one by one.

    On the issue of population growth vs population replacement, I don’t have a specific view one way or another. However, I do believe that it is healthiest for society if the children who are born represent as broad a cross-section of society as possible. If, for example, it was left to people only to have children if they could “afford” them, you might end up with a situation where a disproportionate proportion of children were born into either very rich households or very poor ones, since it is the people in the middle income ranks who would be more likely to carefully limit the size of their families. So one purpose of paid maternity leave and other forms of assistance for low to middle income working families might be to enable them to collectively produce their ‘fair share’ of the next generation.

    You point out quite rightly that women who earn a lot will tend to return to work more quickly because of their higher opportunity cost of staying out of the workforce. But it is just these women who are the ones most likely to have access to paid maternity leave at present – women who work in public service, professions and larger white-collar firms. The main argument for publicly funded maternity pay is to assist lower-paid women to take a minimum period of leave from their employment – it is to improve equity between lower-paid and higher-paid women.

    As to whether ‘doing a good job bringing up kids’ means women staying home longer with their children rather than returning to work, it probably also won’t surprise you that I don’t believe that the test of good mothering is whether you stay at home or not. I think the reality is that many women want to be both mothers and workers and most governments (negative population growth proponents notwithstanding) want women both to have children and to continue to supply their labour to the market. I would just point out that a period of paid maternity leave (as long as it is not conditional on a recipient returning to work immediately at the end of it) is not inconsistent with people taking an appropriate period of time off work. The evidence is that many women who have paid maternity leave supplement it with unpaid leave – presumably the paid leave actually helps to extend the period that they can afford to spend with their new baby.

  40. MsLaurie says:

    I honestly think we should also be looking at paid paternity leave as well, as part of a national scheme. It seems to me that much of the stress for families around the birth of a child is not just financial, but also the sudden re-distribution of roles- suddenly the mother is all about the child, and the father is all about bringing in the money. This surely cannot fail to put even futher strain on the relationship.

    If we accept the idea that mothers and fathers have a role to play in bringing up baby, and that maternity leave provides a dis-incentive to employers to engage women in their late twenties/early thirties, then why not even up the debate by making leave both state funded, and available to mothers and fathers both?

  41. Backroom Girl says:

    MsLaurie

    I think that should certainly be an option, especially if the available leave was to be for longer than the immediate post-birth period. I certainly shared a little over a year’s worth of time off with my partner after the birth of my second child back in 1991-92, but we were in the lucky position where we both had access to long service leave which we could take at half pay, in addition to my 12 weeks of paid maternity leave.

    I do always get frustrated at social policy provisions that make little if any allowance for those couples (admittedly a minority, but becoming more common) who want to share care and breadwinning from the start.

  42. conrad says:

    Just out of interest, why is paid maternity leave better than some legislation forcing employers to keep jobs open and (say) an increased baby bonus? Is it just that the paid maternity leave would cost less than just a more universal lump sum, or is there some other argument I am missing?

    If it isn’t about money, then I’d prefer to see just a lump sum with some legislation, as paid maternity leave discriminates against the unemployed and people that don’t want to take the leave.

  43. Backroom Girl says:

    Conrad – we already have in Australia guaranteed unpaid leave for 12 months, with the employer obliged to keep the job open for that period. This applies to ongoing employees with at least 12 months service (I think).

    Paid maternity leave is primarily an industrial issue – it is about offering employed mothers some financial compensation for the income foregone, rather than a financial reward or incentive for having a baby.

    It is true that having a universal lump sum would give mothers maximum flexibility and not ‘discriminate’ against mothers who are not employed prior to giving birth. But mothers who aren’t working don’t forgo any income. Well, not immediately anyway – you could make an argument that each extra baby they have further postpones their eventual return to work, so there is future income foregone.

    There is also the concern that people who are likely to respond to the financial incentive of a $4-5,000 bonus might not all be the best people to be encouraging to have more children. Realistically, they would be people for whom the net cost of another child is small – people receiving the more-than-minimum rate of family tax benefit (including welfare recipients) who get an increase in family income with each additional child and/or people who are already ‘rusted on’ to the stay-at-home role.

    However, our current government seems to think along the same lines as you – they responded to calls for paid maternity leave by introducing the baby bonus. But now the calls for paid maternity leave are back.

  44. Tom N. says:

    HAVING THEIR KIDS AND EATING OUT TOO

    In comment 39, BB said:

    I understand that the origin of this discussion was in an economics seminar, but it will probably not surprise you to know that I dont see this as just an economic issue, which only needs to be addressed if market failure can be demonstrated…

    For the record, economics provides two broad classes of (potential) justifications for government intervention; addressing market failure and addressing inequity. All the arguments raised by BB can be considered under one of those headings, so it is not clear in what sense they are not ‘economic issues’.

    That said, I find BB’s arguments for childless people to subsidise the reproductive activities and lifestyle choices of parents to be unconvincing. We have already had this argument over on Andrew Norton’s blog, so I won’t repeat it all here. Suffice it for the moment to say that I think few of the external benefits to childless people that supposedly arise from other Australian’s choices to reproduce are either real or significant, and/or could not be harnessed in less costly ways (eg future immigration). Nor do I see any particular equity rationale for transferring resources from people who choose a childfree lifestyle to people who choose a family lifestyle. That said, I certainly do see a case for ensuring that children, once brought into the world, are properly looked after, but in the first instance responsibility for looking after them should reside with their parents; not with childless people.

    As I see it, the crux of the matter is that those advocating parental subsidies in whatever form are – whether they realise it or not – principally seeking to have their particular lifestyle choices bankrolled by others. Indeed, as BB said in past 36:

    In the end, paid maternity leave (however you go about doing it) is about enabling women to be mothers as well as workers, rather than having to choose one or the other.

    While having unfettered choice is of course a desirable thing, what is missing from this formulation and the whole pro-parental subsidy push is any robust argument as to why childless people should have to subsidise the preferences and choices of parents. Motherhood statements about children not being commodities etc etc do not alter this.

  45. conrad says:

    “There is also the concern that people who are likely to respond to the financial incentive of a $4-5,000 bonus might not all be the best people to be encouraging to have more children”

    Is there any real truth in the idea that things like the baby bonus actually cause any behavior change at all in these groups that people love complaining about? As far as I can tell, all of these stories about teenage girls (et al.) having kids to get the bonus seem a lot like weird conservative phantasies given the extremely small number of births in this category. In addition, even if a very small number of kids are born because of it, I find it rather hard to worry about. Perhaps we should congratulate teenage mothers instead of stigmatizing them for political purposes.

  46. Backroom Girl says:

    Tom – I was wondering when you were going to join this conversation. I know that you would be perfectly happy to live in a world with few children and lots of immigration, but the majority of the Australian populace either are, have been or will be parents and seem to be perfectly happy to indulge in the lifecycle income redistribution that Anthony referred to much earlier in this discussion at comment 14. In the end, we all pay our taxes (well most of us do) and the population as a whole via the government decides what to do with them. You appear to think that a tax/transfer system that embodies concepts of horizontal equity is inherently unfair – most people would disagree.

    Conrad – I would never claim that lots of teenagers are going out to have babies on the strength of the baby bonus. Since it was introduced in Australia, the teenage birth rate has risen marginally in the smaller States and both Territories, but not in the larger States and so the longer term downward trend for Australia as a whole has been maintained. And while I don’t think that teenage mothers should be publicly vilified and should receive all necessary support, I think we should be able to agree that teenage motherhood is not an optimal outcome.

    It is a fact, though, that due to the particular tax transfer arrangements we have here, low-income families (especially those with only one or neither parent working) really don’t face a drop in their standard of living if they have another child and, in the short term at least, may make a “profit”. This suggests that, at the very least, they don’t have a strong financial incentive to limit the size of their families even if they don’t intentionally have more babies just for the extra money.

  47. Yobbo says:

    Conrad, it’s not that people would go deliberately out of their way to have babies just because of the baby bonus, but you can surely understand how the payment might sway the decision to do so.

    Teenage mothers aren’t stigmatised for purely political purposes. There is plenty of research that suggests that kids born to teenage mothers start with a significant disadvantage in life.

  48. Yobbo says:

    In the end, paid maternity leave (however you go about doing it) is about enabling women to be mothers as well as workers, rather than having to choose one or the other.

    And paid surfing leave would be about enabling blokes to be surfers as well as workers, rather than having to choose one or the other.

    See what I did there?

  49. Backroom Girl says:

    Yobbo, so glad to see that we agree on something (comment 47). As to comment 48, I refuse to be provoked.

    Look, I agree that being a mother and a worker are not mutually exclusive. Indeed apart from my periods of maternity leave, I have always worked full-time. While paid maternity leave and child care helped me to make the choices I did, as a relatively high income earner, I probably could have afforded it one way or another. Over my almost 30 years as a mother, the amount of direct subsidy I have received from other taxpayers has been very small, but I don’t have a problem with acknowledging that other people in a less privileged financial position than me might need a bit more assistance along the way.

    In the end, publicly-funded maternity leave wouldn’t cost all that much in the scheme of things. And while it could make quite a bit of difference to families in the short term, over the lifetime of a working mother it would be small bikkies. While Tom N seems to think that parents are always putting out their hands to him rather than shouldering their proper responsibilities themselves, I think it is fair to say that the majority of parents in Australia do take on the bulk of the financial responsibility for their children. Encouraging mothers to work actually increases the capacity of parents to support their children, after all.

  50. conrad says:

    Actually, until someone shows me the evidence (versus Today-tonight evidence) that the cash has any meaningful impact on the decisions of at risk teenagers, I’m not going to believe it does. A few thousand bucks is peanuts, especially when considering the initial start-up costs of children. Even the most stupid person could realize that, and any influence on the most stupid population even if it existed is going to be mostly wiped out by them getting pregnant anyway, with or without the bonus (Also, even if it did lead to, say, 50 extra births a year, this is probably not a bad trade-off to keep laws simple anyway, versus the arbitrary categorization of people into good and bad groups).

  51. Patrick says:

    In the end, paid maternity leave (however you go about doing it) is about enabling women to be mothers as well as workers, rather than having to choose one or the other.

    And paid surfing leave would be about enabling blokes to be surfers as well as workers, rather than having to choose one or the other.

    See what I did there?

    I’ll rise to the bait anyway, because I don’t see what he did there.

    a) Surfing can be done part-time – kids are a little more demanding
    b) There is no evidence, speaking as someone with a lot of surfer friends, that surfing adds anything to society. In fact, it seems to encourage otherwise sane young men to become eco-hippies, and thus, increases the possibility of human self-extinction.
    c) People who are very strongly inclined to become surfers are probably not giving up much of a career anyway and are more likely to harm their workplace and business than improve it on their return from a surfing holiday. OTOH, many people who have kids are indeed sacrificing high-value careers and do indeed contribute a lot to improving their workplace and business on their return.

    See what I did there?

  52. Tom N. says:

    BB – Anthony’s sloppy thinking in comment 14 is just that; it is not a justification for parental subsidies. Also, you mispresent my views on children vs immigrants, and either misunderstand the concept of horizontal equity or at least do not substantiate your horizontal equity point – in fact, parental subsidies can be argued to reduce horizontal equity, by discriminating against people on the same income on the basis of their lifestyle choices. Once again, while I’ve seen plenty of motherhood statements in support of parental subsidies on this thread (and those on AN’s blog), I’ve not seen much in the way of rigour.

  53. Backroom Girl says:

    Ah but Tom, both horizontal and vertical equity relate to the concepts of, on the taxation side, capacity to pay and on the transfer side, relative need. You seem to believe that income is the only relevant factor in measuring capacity to pay, whereas most people believe that some account should also be taken of the number of people who have to live off said income. Perhaps that’s sloppy thinking but, if so, call me sloppy.

    Conrad – I’m not suggesting that anyone should positively discriminate against teenagers. What I am saying is that you would only expect certain groups (by definition people without too much of a long-term perspective) to respond to what is for most people a fairly piddling financial incentive. I wouldn’t expect the baby bonus to have an impact on the rate of teenage pregnancy, for example, but it might have an effect on low-SES teenagers’ decisions about whether to continue with a pregnancy.

    In any case, most Australian teenage mothers are single parents – they already get access to the best (adult) income support that we have on offer here. The baby bonus is just icing on that cake.

  54. Tom N. says:

    So, BB, your supposed ‘horizontal equity’ argument for parental subsidies actually hinges on the fact that kids cost lots of money (whether directly or in income forgone). Well, BMWs, mansions, year-long pilgrimages (or surfing holidays) and many other things also cost lots of money – and so people who engage in those activities have less money left over compared to people on the same incomes who do not (cet par). How does that fact justify subsidies for people who choose tp spend their time and money doing those things? It doesn’t, of course, and, yes, on the evidence in this debate, you are a sloppy thinker.

  55. Yobbo says:

    Ill rise to the bait anyway, because I dont see what he did there.

    I’m not trying to “Bait” anyone here, but simply trying to reiterate my original point.

    People have different priorities and goals in life. Some people would like to become parents, and others would prefer to climb a mountain or paint landscapes.

    Some people value a well-paid, challenging job above all else. Others, who have come to be called things like “downshifters”, “seachangers” or what have you, forgo that particular goal in favour of things that are more important to them. One of those things might be travel, sporting pursuits, or a quieter life away from the city.

    “Parents”, in my opinion, are just a specific (albeit much more common) category of “Downshifters”. They (traditionally) have voluntary sacrificed one goal (a challenging career) in favour of another (raising a child).

    There’s nothing wrong with making that choice, of course. But it is wrong to expect the rest of the country or their employer to pay for that choice. Just as it would be to expect for us to pay for you to trek through the Himalayas or supplement your wage if you left Sydney to go and live in Byron Bay.

    The desire to have kids is obviously very strong for a lot of people. Why do we need to subsidise people to do it?

  56. Backroom Girl says:

    “Well, BMWs, mansions, year-long pilgrimages (or surfing holidays) and many other things also cost lots of money”

    ie kid=BMW not kid=human being

    nuff said – you and I aren’t ever going to meet in the same philosophical universe

  57. Yobbo says:

    Oh please.

  58. conrad says:

    “In any case, most Australian teenage mothers are single parents – they already get access to the best (adult) income support that we have on offer here. The baby bonus is just icing on that cake.”

    Sorry to bothersome, but if I include all the indirect subsidies (including schooling, child-care which teenage mother won’t need, etc.), are we really talking about a whole of difference in government subsidies between teenage mother A, and, say, bottom 30% of the income distribution non-teenage mother B? If we arn’t, then this is clearly a case of picking on teenage mother A, for no real reason.

    Thats a serious question incidentally — I think people dichotomize good-and-bad at far too early a point in terms of childhood outcomes and government dependence. Maybe teenage mother A isn’t the best example of someone likely to have great outcomes, but I doubt the next 20% of the distribution is really much better.

  59. Patrick says:

    There is a fundamental divide on this thread between those who see both
    a) kids, and
    b) mothers returning to work
    as providing externalities that outweigh the (small) costs from society’s perspective, and those who do not agree.

    Happily, one need not say that never shall the ‘twain meet, since time is on the first group’s side :)

    Conrad, whilst I think most of us agree that teenage mothers are not necessarily a disaster, I don’t think it takes too much imagination to see how the demands of caring for a child can make it much harder for someone still in school to effectively continue that schooling; the resulting financial pressures make further study with its attendant benefits, already further out of reach because of impaired school performance, so much less likely; and there is a certain maturity that anyone, low-income earner or not, might reasonably be expected to have at say 22 but not at 16.

    All that said, I absolutely agree that ‘teenage’ is not necessarily a relevant discrimen. I for one would think that ‘committed long term couple’ should be the most relevant discrimen – but how in hell do you target benefits on that basis??

  60. Jennifer says:

    I hesitate, but I added to my comment (7) with a blogpost expanding my thoughts that the positive externalities of maternity leave outweigh the negatives from society’s point of view here

  61. Pingback: Paid paternal leave might fix gender wage inequity « Balneus

  62. observa says:

    Nabakov’s a population subsidiser Yobbo. Ask him if he believes in taxing women having abortions to help pay for his preference here. Progressively of course.

  63. Othello Cat says:

    ” If I have to read one more time about how having a child is equivalent to buying a new car or going to Germany for Oktoberfest (though I must admit that is a new one), I think I will just scream. Im just grateful if people who think that way decide not to have children, really. What it would be like to be their child doesnt bear thinking about.”

    *rolls eyes*

    When in doubt, employ the ad hom.

    Pay attention to the child abuse stats “backroom girl” — the offenders are not the childfree.

    Attention virulent breeders: I did not choose not to have children with the sole intent of pi$$ing you off, so get over it! I choose to be childfree not because I wanted a better career or, indeed, to trek through the Himilayas. I simply do not want children.

    It is curious that the childfree are stereotyped as materialistic by the same voices that have their hands held out for middle-class welfare. The same voices that chant the tiresome predictable refrain that usually goes along the lines “you childfree [jezebels] will never know how you are missing out on a richly rewarding experience [by not having children]” If it is so rewarding then there is no need to pay you to do it then I suppose.

    Sure, I can sleep in on a weekend, can maintain a great sex life with my partner, I do not have to change nappies at 3am and I still have a tiny waist. However, that does not justify making my discretionary income and spare time expendable. Currenty it is highjacked – redistributed to breeders who seem to assert the rights to a zero sum impact from their ill-conceived (no pun intended) fecundity. I should not be expected to work the unsociable hours so that breeders “have the right” to flexible arrangements.

    Yobbo is right: it is wrong to expect the rest of the country or their employer to pay for that choice.

    Our nation and indeed, this globe is not facing human extinction any time soon. Peak oil, global warming and water shortages are not fantasy. If anything, the breeders should be thankful that the childfree are not burdening this planet.

    Further, those that bang the “making of the taxpayers of the fyoooocha ™” gong may wish to revise the stats on childhood overweight and obesity and alchohol abuse. Chances are this cohort of over-subisidised kiddies will need the drool wiped off their own chin before they elect to be that fabled nurse and doctor in my future nursing home.

    BTW — Hi Tom! *waves*

  64. Patrick says:

    Othello Cat, I’m sorry you regret your decision (or was it merely your inability to find someone suitable?) and that it causes you such internal tension.

    However, I did think it was worth pointing out that no-one is accusing the childless of being materialistic. The ‘accusation’ you are referring to is pointing out that the decision to have a child is neither a purely economic nor a purely self-indulgent one.

    You were born, literally, to have children. No wonder you are so angst-filled!

  65. Backroom Girl says:

    Othello Cat – sorry if you took offence at my slight testiness. I’ll try not to take offence at being labelled a ‘virulent breeder’.

    And, do you know, I really don’t have any opinion about you based on whether you have chosen to have children or not. It seems to me that you are the one with an apparently deep-seated revulsion for people who have made a different decision to you.

  66. Patrick says:

    virulent breeder = evolutionary success. The future is ours :)

  67. Othello Cat says:

    Patrick, “(or was it merely your inability to find someone suitable?)”

    Wow! That’s a new one. The “you-must-be-childfree-coz-you-cannot-get-a-husband/boyfriend/laid” retort. Geewhiz, can’t say that I have heard that one before, Pat. You musta spent hours comming up with that.

    I must confess that there was a time that I could not get a husband or partner. I was just too busy being expensively wined and dined by the mothers’ negelcted husbands/partners who would then whirl me away to sumptious suites and, between hours of passionate love-making, would excitedly comment (yet reflect wistfully) how my firm and younthful body and passion reminded them of how their wife once was until The Baby took her attention away.

    BG: “It seems to me that you are the one with an apparently deep-seated revulsion for people who have made a different decision to you.”

    No, I just have a distict dislike of the smug self-important child-burdened who, while reaching into my pockets, claiming some kind of moral high ground that justifies that their lifestyle choice is so vastly superior that it ought to be subsidised by those that have not made the same lifestyle choice.

    I do not object to anyone taking time off work to look after their kids — so long as you do not mind I head off to the pub while you do it.

  68. Helen says:

    and out in the real world, someone in a short term job is not always looking to make it a permanent arrangement.

    Could someone get it through some peoples’ heads that having children is part of the real world?

    And as someone who has enormous hope for ZPG (a somewhat antiquated term, I’m old-ish), Could I remind some of you that “having children” does not equate with increasing the population? If a couple has 2 children that is still below replacement level. Just a basic fact that’s being forgotten in this discussion. Thanks.

  69. Patrick says:

    In sum, Othello Cat, I think we have each made the most appropriate choice – I daresay my children shan’t miss yours.

  70. NPOV says:

    Non-breeders are not subsidising breeders, they are subsidising children who can’t pay their own way.

    That some breeders use the money irresponsibly is a problem, but I’m not sure attaching too many strings to it will actually prove productive.

  71. Pingback: Maternal leave: careful what you wish for « Balneus

  72. Conrad, it’s not that people would go deliberately out of their way to have babies just because of the baby bonus, but you can surely understand how the payment might sway the decision to do so.

    Teenage mothers aren’t stigmatised for purely political purposes. There is plenty of research that suggests that kids born to teenage mothers start with a significant disadvantage in life.

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