1 Introduction 1

2 Some Preliminaries 6
2.1 The Parental Leave System 6
2.2 Time Periods of Analysis 7

3 Data and Sample Construction 8
3.1 Datasets 8
3.2 Sample Construction 11

4 Parental Leave and Future Wage Penalties 12
4.1 Parental Leave 12
4.2 Wage Penalties 15

5 A Simple Model of Parental Leave 18
5.1 The Model 18
5.2 The Maximization Problem 21

6 Estimation 24
6.1 Wage Parameters and Functional Forms 24
6.2 Internally Estimated Parameters 26
6.3 Estimation Procedure 27
6.4 Estimation Results and Parameter Interpretation 29

7 Economic Incentives and Cultural Change 32

8 Increasing Gender Equality: Some Alternative Policies 36

9 Conclusion 41

Appendix 43

References 47