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In this study, we investigate whether government-funded paid parental leave affects strategic firm behaviour. We focus on the gender and age composition of the workforce as our main outcome. All firms are affected by laws regulating parental leave but differently due to strong gender segregation in labour markets. For identification, we exploit a series of expansionary reforms of the duration of paid parental leave in Norway that introduced long-lasting changes, and a long employer-employee matched panel data set following workers and firms back until before the first reforms. Using a Bartik-type instrument to identify causal effects at the firm level, we find evidence suggesting that firms substitute younger female employees with older female employees, and male employees.
