Does bargaining power influence the sharing of temporary parental leave?

Anna K. Meyer, Lund University

In this study, temporary parental leave (to take care of a sick child) is viewed as a household public good, produced with time inputs of the parents. Assuming equal productivities in the production of temporary parental leave and equal utility functions of the male and the female we apply different household decision-making processes to develop theoretical hypotheses that we test empirically. The empirical estimations show that the decision making process of the spouses can be explained by a Stackelberg model with male dominance. However, we find that a stronger bargaining position of the female pushes the intra household allocation of temporary parental leave towards greater sharing between the spouses. The ceiling in the temporary parental leave insurance influences sharing when only one of the spouses has an income above it, indicating that an increase in the ceiling will further sharing in some families while reducing it in others.