We study the effect of paternity leave on early child development. We collect sur-vey data on 5,000 children under age six in Spain and exploit several extensions of paternity leave that took place between 2017 and 2021. We follow a differences-in-discontinuities research design, based on the date of birth of each child and using cohorts born in non-reform years as controls. We show that the extensions led to significant increases in the length of leave taken by fathers, without affecting that of mothers, thus increasing parental time at home in the first year after birth. Eligibility for four additional weeks of paternity leave led to a significant 12 percentage-point increase in the fraction of children with developmental delays. We provide evidence for two potential mechanisms. First, children exposed to longer paternity leave spend less time alone with their mother, and more time with their father, during their first year of life. Second, treated children use less formal childcare. Our results suggest that paternity leave replaces higher-quality modes of early care. We conclude that the effects of parental leave policies on children depend crucially on the quality of parental versus counterfactual modes of childcare. [Funding for this report was provided by the Spanish Agencia Estatal de Investigación (AEI) and the Spanish Ministry of Science, Innovation and Universities.]