Maternity Leave and the Evidence for Compensating Wage Differentials in Australia


: Rebecca Edwards, Reserve Bank of Australia, GPO Box 3947, Sydney, NSW 2001, Australia. Email:


Using data from Wave I of the Household, Income and Labour Dynamics in Australia Survey, 2001, in this paper I investigate the value of the maternity leave provisions available to Australian women. The theory of compensating wage differentials informs the model used to estimate the shadow price of eligibility for both paid and unpaid maternity leave benefits. The results suggest a negative wage differential may exist in Australia such that employed women eligible for maternity leave receive a lower rate of pay than those ineligible, all other things being equal. The policy implications of the results are discussed.