New Research Memorandum (ROA-RM-2018/6)
Becoming a mompreneur: Parental leave policies and mothers’ propensity for self-employment by Ruud Gerards and Pomme Theunissen
Contractionary parental leave policy reforms decrease the time mothers can stay at home after giving birth. This might discourage them to become an entrepreneur. Exploiting a German parental leave policy reform, we apply a regression discontinuity approach to establish a causal relationship between parental leave policies and the probability for mothers to become entrepreneurs (i.e., “mompreneurs”). We find that a decrease in the generosity of parental leave lowers the odds of mothers to become self-employed by 17%. We show additional evidence that suggests that this is particularly due to the reduced period of paid parental leave.