Providing mothers with access to paid parental leave may be an important public policy to improve child and maternal health. Using extensive information from the Longitudinal Study of Australian Children, we estimate how paid parental leave entitlements influence children's health up to age 7. Exploiting detailed information on children's health, family background, mothers’ pre‐birth work histories and mothers’ health behaviours during pregnancy, we show that paid parental leave entitlements go together with a reduced probability of a child having multiple ongoing health conditions, but show no significant correlation with any single condition. We find that the reduction in multiple conditions is strongest for children from lower socioeconomic backgrounds. Our study implies that the provision of paid parental leave for short periods is unlikely to substantially improve child health on average, but may potentially benefit the health of more disadvantaged children.