In many Western societies, policy efforts seek to increase fathersâ involvement in parental leave, yet many fathers remain reluctant due to concerns about earnings consequences. Despite these concerns, the consequences of parental leave and their underlying mechanisms remain understudied. Using novel German administrative data on 109,735 married fathers who became first-time parents between 2007 and 2013, we analyze their earnings trajectories following parental leave. The large sample allows for investigating potential differences in earnings trajectories between fathers who took no parental leave and fathers who took leave of different durations. To improve comparability between the different groups of fathers, we apply two-way fixed-effects models weighted by coarsened exact matching. Moreover, the data enables us to consider differences in post-birth work volume as potential confounder for differences in earnings trajectories. We find that fathers who take parental leave experience lower earnings trajectories compared with those without leave. This difference increases with leave duration: 7 years after the birth of their first child, fathers who took up to 2 months of leave see their annual earnings increase 2.2 percentage points less relative to their pre-birth baseline than fathers who took no leaveâfor those who took longer leave, the gap is 12.8 percentage points. While these gaps initially appear disproportionately larger for longer leave durations, the disparity diminishes once we account for differences in active employment and part-time transitions. Moreover, the differences in work volume explain a large share of the observed earnings gaps, reducing them to 1 and 4.6 percentage points.