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.

Suggested Citation:

Wang, Buyi, Meredith Slopen, Irwin Garfinkel, Elizabeth Ananat, Sophie Collyer, Robert Paul Hartley, Anastasia Koutavas and Christopher Wimer. 2024. The Benefits and Costs of Expanding Paid Family Leave. NBER Working Paper Series. Cambridge, MA: National Bureau of Economic Research. 

Published December 2024