The United States has the fewest mandatory parental benefits of all the leading nations in the world. However, it would be economically beneficial to both employers and employees if a more comprehensive leave program were to be offered in the United States. Data from European countries, that do have paid leave programs, shows an increase in the labor force and no economic loss after the mandated policies went into effect. Turnover is quite costly to a firm and studies of paid leave programs show that paid leave is associated with higher retention rates. Firms that have implemented paid leave policies to reduce turnover have experienced these results. Studies of the 2004 California Family Rights Act which mandated paid leave time have supported the data from European countries. By not updating the Family Medical Leave Act of 1993 businesses in the United States are not meeting full economic potential.

Note on the Author

Katharine West is a senior Economics major. This paper was written for Managerial Economics taught by Professor Itler Bakkal.

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