Impact of Alternative Benefit Levels and Parental Choices on the Parent's Income

One aim of the Finnish parental leave benefit scheme (maternity-, paternity and parental leave benefits) is to support the participation of both mothers and fathers in caring their child since her/his birth. Most fathers take up paternity leave when the mother is on her leave, but very few fathers share parental leave. That accumulates long absences from work to the mothers and the costs of the scheme to the female dominated industries. One reason to fathers' low take up, it has been argued, is fathers' often higher income compared to his spouse and low compensation rate of the benefit for the higher income. This DP presents changes in the level of the benefit scheme since the 1990's and analyses spouses' income differences in different family situations. The main aim, however, is to evaluate a tripartite proposal in the Spring 2006 to reform parental leave benefit scheme. Evaluations are made using micro simulation methods at population level and in type-family calculations.