Parental leave regulations in most OECD countries have two key policy instruments: job protection and cash benefits. This paper studies how mothers' labor market outcomes depend on alternative mixes of these key policy parameters. Exploiting a series of major parental leave policy changes in Austria, we find that longer cash benefits lead to a significant delay in return to work and that the magnitude of this effect depends on the relative length of job protection and cash benefits. We do not find a significant impact on labor market success in the medium run, neither of benefit duration nor of job-protection duration. To understand the relative importance (and interaction) of the two instruments we set up a non-stationary job search model in which cash benefits and job protection determine the decisions of both when to return to work and whether or not to return to the pre-birth employer. Despite its lean structure, the model does surprisingly well in matching empirically observed return to work profiles. The simulation of alternative counterfactual regimes shows that a policy that combines both job protection and benefits payments succeeds to induce mothers to spend some time with the child after birth without jeopardizing their medium run labor market attachment.JEL Classification: J13, J18, J22 Keywords: Parental leave, family and work obligations, return to work, labor supply, earnings, family earnings gap * We acknowledge helpful discussions with Giovanni Favara, Betsey Stevenson, Justin Wolfers, participants at the IFN workshop on family policy in Stockholm, the ESSLE conference in Buch/Ammersee and the ZEW microsimulation conference in Mannheim, and seminar participants at the Federal Reserve Bank