A more even distribution of parental leave between father and mother increases the family's total income, write economists Krista Kalnberzin and Lyudmila Fadeeva on the "Makroekonomika.lv" website, LETA reports.
Economists calculated that in this case, family income could be about 6% higher, and if childcare is balanced in the long term, the difference could reach 18%.
At the same time, if parental leave is primarily taken by one parent, the income gap between parents can persist for decades. Even after returning to the labor market, income levels do not fully recover, economists note.
Formally, parental leave in Latvia is available to both parents; however, in practice, it most often becomes a career break for one of them — usually the mother. According to the Central Statistical Bureau (CSB), women tend to take longer leaves more frequently.
Father participation, although increasing in recent years, remains relatively low. According to the CSB, in 2024, 23% of parental benefit recipients were men, but this data does not show how much time men actually spent with the child — it could be just a small part of the total leave, economists from the Bank of Latvia explain.
They emphasize that in the long term, the concentration of parental leave with one parent can affect their career development and income long after returning to the labor market. If the primary responsibility for children in the family remains with one parent, the income gap may become entrenched.
To assess this impact, economists calculated how parents' incomes could develop over their lifetime under various scenarios of parental leave distribution. The results show that the often observed model — where leave is primarily taken by one parent — reduces the overall income potential of the household in the long term.
Economists explain that in Latvia, gender differences in the labor market significantly change with age. In the youngest age group (15–24 years), employment differences are smaller; however, there is already a significant wage gap — about 9%. This is partly related to the choice of education and profession, influenced by societal expectations regarding gender roles, as well as employers' assumptions about potential future career breaks for family reasons.
If childcare were systematically shared between both parents, the impact of such expectations on women's wages would diminish, and the differences could be lower even at an early stage of their careers, economists note.
In the age group of 35–44 years, employment rates between men and women begin to equalize; however, the wage gap becomes even more pronounced — nearly 17%, economists inform. After 45, the employment level is virtually the same, but the wage gap remains high (16% in the 45–54 age group and 12% in the 55–64 age group). This indicates that the income difference persists even when employment levels equalize.
In their calculations, economists assumed that wages grow by 3% annually, and every three years there is an additional career leap with an income increase of about 7%. These leaps significantly influence the long-term income dynamics. The calculations also compared three possible scenarios for parental leave distribution under the condition of equal initial incomes for parents.
In the first scenario, one parent (usually the mother) takes all the parental leave. In this case, due to the work break, one career leap is missed.
In the second scenario, the same parent not only takes all the leave but also primarily takes care of the children and manages the household for as long as the children live at home. It is assumed that after returning to work, the salary continues to grow by 3% per year; however, career leaps no longer occur, as the home responsibilities limit the ability to take on new duties.
In the third scenario, parents split the leave evenly. Each has a work break of less than a year, and the career leap is not lost but merely postponed. Subsequently, childcare responsibilities are evenly distributed, and both parents maintain similar opportunities for career growth.
The results of the calculations show that in the first case, by age 40, the income difference could reach about 22%, even if responsibilities are shared equally after returning to work. In the second scenario, the gap becomes even more pronounced — around age 40, it could reach 33%, and by retirement age, approach 50%. In the third scenario, the income dynamics of both parents remain much more balanced, and the household's total income in the long term is higher.
Economists from the Bank of Latvia note that these differences have long-term consequences. In Latvia, the pension system is directly linked to social contributions paid throughout life, so lower incomes today mean lower pensions in the future. Data from the Organisation for Economic Co-operation and Development (OECD) shows that women in Latvia receive, on average, about a quarter less in pensions than men, and this difference largely reflects the accumulated lifetime income gap.
At the individual level, this also means greater financial vulnerability, especially in the event of divorce or the partner's death. If one partner's career develops more slowly for a long time, the household's financial cushion is formed unevenly, economists explain.
If initially one partner earns more, for example, holds a higher-paying position, it may seem logical for the family that the one with the lower income takes parental leave. Economists note that such a decision reduces immediate income loss in the short term; however, in the long term, it diminishes the overall income potential of the family.
"Lower incomes can become the basis for further role distribution, and childcare often remains with one parent. If the break lasts longer than a year, the likelihood of missing career growth stages — promotions, new responsibilities, or salary increases — increases, and further development occurs from a lower base," economists write.
The simulation conducted by Kalnberzin and Fadeeva shows that in a family with two children, where parental leave is evenly distributed — for example, eight months for each parent — and initial incomes are comparable, the household's total income by age 50 could be about 6% higher than in a situation where one parent takes all the leave.
If childcare and household management continue to be unevenly distributed and this limits the professional development of one parent, the difference could grow to 18%. This effect occurs because shorter and more balanced breaks interfere less with career growth, allow both parents to maintain similar development opportunities, and increase the family's overall income, economists explain.
If in many families throughout their working lives, income loss of 6–18% is repeated, this means a narrower tax base for the state, economists from the Bank of Latvia note. Lower incomes reduce social contributions and income tax revenues, which affects both the funding of the pension system and, in a broader sense, the state's ability to provide public services and invest in development.
