Typically, it is is paid through taxes or the health insurance system. Assuming parental leave of 1 year, this amortizes over a working life of 45 years to a l

Typically, it is is paid through taxes or the health insurance system. Assuming parental leave of 1 year, this amortizes over a working life of 45 years to a little over 2% (while some people will not work or will not work for all 45 years of their lives between 20 and 65, a corresponding fraction will not take parental leave; in fact, if the lower income parent takes parental leave, it's generally less). This pays off because we know that the first two years are absolutely crucial for the development of a child; parental leave pays off in the form of more productive adults and lower criminality. It is well worth the investment even from a purely actuarial perspective and if you disregard the moral component.