Changes in maximum parental leave payment in Iceland and total fertility rates

Following the 2008 financial crisis, the Icelandic Government reduced the maximum parental payment until 2016, when it was increased again. The aim of this study was to investigate the effect of the changes in the maximum parental leave payment in Iceland during 2009 and 2016 on total fertility rates and birth rates during 2002–2019.

Publicly available aggregated data on yearly total fertility rates, birth rates, unemployment rates, gross domestic product (GDP) and maximum parental leave payments were obtained for 2002–2019. Segmented regression analyses were used to measure the impact of changes in parental leave payment on term births for the two periods in which changes were implemented (2008–2010 and 2016–2017).

The decrease in maximum parental leave payment during 2008–2010 was associated with a 15% decrease in the estimated total fertility rate compared with the expected rate (−15.7%; 95% CI −22.7 to −8.7), whereas the increased payments during 2016–2017 indicated a possible 3% increase in the estimated total fertility rate (3.2%; 95% CI −29.1 to 35.5). Neither adjustment for the unemployment rate nor the GDP appeared to affect these results. The overall birth rate followed a similar trend and was most pronounced for women aged 25–34 years.

These results suggest that total fertility rates in Iceland may have been affected by changes in the maximum parental leave payment that occurred in 2009 and 2016, although the effect of the 2008 financial crisis cannot be excluded despite adjustment for the unemployment rate and GDP.