Parental leaves and early career trajectories in Finland Kati Kuitto, ETK Conference 2018

1. Parental leaves and early career
trajectories in Finland
Kati Kuitto
ETK Conference 2018
Gender Inequalities in Employment and Pensions
Helsinki, 18 May 2018

2. The research questions
 How do early career trajectories of women and men differ?
 Are parenting leave breaks detrimental for early careers?
Research project Parenting as Early Career Earnings Risk
Kati Kuitto, Janne Salonen (Finnish Centre for Pensions) and Jan Helmdag
(University of Greifswald)
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3. Why study early career trajectories and parental
leaves in Finland?
• Early career labour market attachment is crucial for working age
income and further career, but also for pension accumulation and
old-age income
• Parenting and unemployment are the most common reasons for
a career break; women carry the main part of earnings risks due
to parenting leaves
• In Finland…
…the home care allowance builds an institutional incentive to drop
out of the labour market
…high societal acceptance for women staying at home for child care
…long spells of parenting leaves for women
…however, full-time employment of women is rather high and gender
gap in employment rate is low
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4. The Finnish parental leave scheme in brief
Maternity allowance
(105 days)
Paternity allowance
(54 days)
Parental allowance
(158 days)
Home care allowance
(until 3 years)
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Birth 3 months 9 months 1 year 2 years 3 years
Mothers take 90.5% of all parenting leave days (2016)
Source: KELA 2018
After parental leave, public child care and early education
available for all children until school age

5. Cohort Study on Early
Career Trajectories

6. Design of the study
• Cohort study of Finns born in 1980
 62 687 Finnish residents (30 510 women, 32 177 men)
• Individual-level register data (ETK, KELA, Statistics Finland)
• Study period 2005-2016
 Age 25-36: the phase of early career and creating a family
• Indicators of early career labour market attachment
 Yearly wage earnings
 Yearly working days
• Multi-trajectory analysis of wage earnings and working days +
regression modelling of parental leave effect
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7. Womens’ earnings trajectories
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Low Increasing
7.3 % 7.8 % 6.9 % 7.3% 70.1 %
U-shape Decreasing High
Wageearnings(mean,ihs)
Predicted wage (ihs) Median bands

8. Mens’ earnings trajectories
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Low Decreasing
6.4 % 5.8 % 4.5 % 21.0 % 62.4 %
Increasing Attaching High
Wageearnings(mean,ihs)
Predicted wage (ihs) Median bands

9. Factors leading to weak labour market attachment
• Education has major influence on trajectories
 Low education leads to being in the low attachment trajectory
 Low education has a strong negative effect on wage and working in
combination with migration background, unemployment, being
single or divorced, or having multiple children
• Disability is clearly related to low or decreasing labour market
attachment and is an even more important factor for men’s
unstable careers
• Unemployment is equally detaching for men and women, but
more often behind decreasing earnings development for men
• Migration background is a greater hindrance for women than
for men. However, migrants are often also on an increasing path
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10. Low difference in employment, but high difference in
accumulated earnings already in early career phase
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Occupational
segregation
Women work more
often in low-payed
jobs
Women have fewer
working hours (part-time
work, less overtime)
…and parenting
leaves
At the age of 36

11. Differences in Career Breaks Due
to Parenting

12. Opposite family-career dynamics of men and women
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0,5
0,8 0,8
1,2
1,5
1,3
0
0,5
1
1,5
2
2,5
Men
Age 36 Age 25
2,0
2,2
2,1
1,7
1,4
1,6
0
0,5
1
1,5
2
2,5
Women
Age 36 Age 25
Number of children at the age of 25 and 36

13. Paternity leave is much more common in stable
employment
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Total maternity and paternity leave days 2005-2016
5
13
20
33
44
39
0
5
10
15
20
25
30
35
40
45
50
Mens' paternity leave days
269
209
256
239
225 230
0
50
100
150
200
250
300
Womens' maternity leave days

14. Great difference in take-up of parental leave
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Total parental leave days 2005-2016
680
536
635
587
539
559
0
100
200
300
400
500
600
700
800
Women
8
20
27
41
54
48
0
10
20
30
40
50
60
Men

15. Home care considerably less common among highly
attached women
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Total home care allowance days 2005-2016
1 379
941 924
806
457
620
0
200
400
600
800
1000
1200
1400
1600
Women
39
54
46
32
18
24
0
10
20
30
40
50
60
Men

16. Effect of career breaks due to parenting differs
between women and men
• The number of children has significant negative short- and
long-term effects on women’s wages, but positive on men’s*
• Parental leave breaks have significant negative effect on
women’s earnings in short and long term – but not for men*
• Home care leaves have negative effect on both women’s and
men’s earnings in short and long term*
• The longer the parenting-related breaks, the lower is the
probability of women for being on high labour market
attachment trajectory**
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*Based on error correction models estimating wage equilibria (fixed effects unconditional
additive split sample estimation)
**Based on multinomial regression models estimating trajectory membership probabilities

17. Conclusions and Policy
Implementations

18. Key findings
Gender differences accrue already in the early career
• Women’s early career earnings accumulation is 70% of men’s
• Men’s parenting-related career breaks total 111 days on average
in this early career period, women’s total 1,408 days on average
 1:13
• Long parenting leaves harm mothers’ earnings and labour
market attachment
• “Child penalty” for women, “child reward” for men
• Other more important reasons for weak labour market
attachment include disability, low educational level and
unemployment
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19. Ways to make early careers more equal –
policy implications
 Family and labour market policies for a more equal
distribution of care responsibilities between mothers and
fathers
 Promote labour market participation of women (and men)
with low socioeconomic status and migration background
 Initiatives to diminish occupational segregation
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20. Thank you!
kati.kuitto@etk.fi