How Can Paid Maternity Leave Boost Female Entrepreneurship?

Abstract

This paper reveals that providing mothers with a higher maternity leave allowance raises their probability of becoming self-employed after childbirth. Using administrative data from Belgium between 2002-2015 and a Regression Kink Design, I estimate that a 900-euro increase in allowance raises the probability of becoming self-employed by six percentage points. Regarding self-employed mothers’ incentives, I find evidence that the allowance might lift financial constraints for those residing in provinces with poor access to banks. I also reveal a positive effect on higher-order births and argue that self-employed mothers might seek flexible work arrangements when they worked in less family-friendly sectors.