Academy of Financial Services Annual Meeting 2022

alternative financial services, paid leave, wage replacement

The United States is the only developed country that does not provide access to paid family leave at the federal level for new parents. However, few states have implemented paid parental leave programs that offer time off from work with partial wage replacement so parents can take care of a newborn or adopted child. Most research on paid family leave focuses on parents' labor supply and child outcomes. This analysis uses the Current Population Survey and a multivariate triple difference analysis to study the effect of paid parental leave programs on the use of alternative financial services such as payday loans, title loans, and pawnshops. Preliminary results suggest that new parents increase the use of alternative financial services when they have access to paid parental leave. A possible explanation is that paid parental leave programs provide the necessary incentive for parents to take time off, but the partial wage replacement is not enough to cover the temporary shock in income.