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The Benefits and Costs of Paid Family Leave
National paid family leave programs have been repeatedly proposed in the United States in recent years. To inform policy discussions, we provide a benefit-cost analysis of introducing such a program. We systematically identify high-quality, quasi-experimental studies on the impact of paid leave on infants and parents. Using the most conservative estimates or the mean estimates from this literature, we estimate that every $1,000 investment in paid parental leave would generate, respectively, $7,275 or $29,406 in present discounted net social benefits. We use these estimates to conduct a microsimulation of benefits and costs of two policy proposals with different eligibility and wage replacement rates. The first, a 4-week program, would have an initial fiscal cost of under $2 billion and net social benefits of $13 (conservative) or $55 billion (mean). The corresponding figures for the 12-week program are about 3.7 times larger, suggesting that either version would likely generate high returns.
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