Parental Leave in Sweden: The Effects of the Second Daddy Month

In 2002 the number of months reserved for fathers in the Swedish parental leave system increased from one to two. This coincided with an increase of total time of parental leave from 12 to 13 months. The results are obtained using a natural experiment approach, comparing the behavior of parents to children born immediately before and after the reform. Both fathers and mothers increased their use of parental leave after the reform. The increase for fathers was caused by a shift of fathers using about one month of parental leave to about two months. The increase was smaller than after the introduction of the first daddy month. From this we can conclude that fixed costs for taking parental leave are not important for fathers and that the marginal utility of parental leave is not increasing in total parental leave.