Working Paper

Bucks for Bumps: How Paid Parental Leave Pays Off for Firms

Updated June 2026

Firms use benefits such as paid parental leave (PPL) to attract and retain employees. In the U.S., which lacks broad public PPL benefits, firms increasingly provide this benefit. Systematic evidence of its benefits remains limited, due in part to the absence of comprehensive data on firm policies. Using a novel, hand-collected database of firm policy changes, this paper estimates the causal effect of PPL expansion on employee retention using a differences-in-differences approach. PPL expansions reduce departure rates for both men and women by 3.5%. Retention gains for women are concentrated among the lowest paid and those in the most junior roles, while retention gains for men are broad-based. At the firm level, PPL expansions reduce departures most in firms with moderately flexible internal labor markets. PPL expansions also have stronger effects when bundled with other family-friendly benefits. Firm PPL expansions do not appear to yield differential retention effects in jurisdictions with public PPL benefits. Combining fertility estimates from the American Community Survey (ACS) with worker and firm data, the paper calculates the expected costs of PPL provision and compares them to retention gains: at realistic utilization rates, PPL expansions generate positive net returns to firms.

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