Parental Leave Effects on Firms and Workers
Monday, Jan. 4, 2021 12:15 PM - 2:15 PM (EST)
- Chair: Mathias Huebener, German Institute for Economic Research (DIW Berlin)
Assessing the Impacts of Paid Family and Medical Leave Laws on Employers: Insights from Surveys of Employers
AbstractWe study the impacts of New York’s 2018 Paid Family and Medical Leave law using data we collected from representative samples of small and medium sized employers in New York, New Jersey, and Pennsylvania in fall 2016 and 2017 (pre-law) and fall 2018 and 2019 (post-law). Our survey covered four domains: Employee Characteristics and Performance; Company Benefits and Policies; Employee Life Events and Work-Flow; and Public Policies (Coverage of the federal Family and Medical Leave Act and Views on State Law). Utilizing a difference -in-difference methodology, we measure the impact of the New York law on productivity, employee turnover, absenteeism and morale, and also consider the impact on employers’ own provision of a variety of employee benefits.
Family Leave Programs: Employer Responses and the Gender Wage Gap
AbstractJob-protected and paid family leave may have unintended consequences when we consider firms’ equilibrium responses. In the presence of labor market frictions, employers might incur adjustment costs upon workers’ absence and turnover. We quantify the costs faced by firms that employ workers of varying durations of family-leave. Exploiting exogenous variation from a 3-month parental leave expansion in Sweden, we find that women worked 2.5 months less after childbirth whereas men worked only 1 week less. Moreover, the reform increased the probability that women separate from their pre-birth employers. Women with fewer substitutes within the workplace took up less leave and shifted take-up to their spouses, suggesting that workers internalize their employer’s adjustment costs. Firms with greater exposure to the reform responded to the labor shortage by hiring temporary workers and increasing incumbents’ hours. The total wage cost of these adjustments was over and above the salary for the person on leave, suggesting that such reorganization is costly. We document substantial heterogeneity in firms’ strategies by the ease with which replacement workers could be found, indicating several sources of frictions associated with worker absence and exits. Finally, focusing on all active firms in the economy, we find suggestive evidence that firms with a higher predicted reform exposure reduced their relative hiring of women of childbearing ages, and those hired were less likely to be promoted than their male and older counterparts. In the aggregate, the employment composition shifted towards male and older women in industries with a higher predicted reform exposure.
A Firm-Side Perspective on Parental Leave
AbstractWhile longer parental leave can help reconcile work and family life for parents, longer worker
absences increase the gap in firms’ business operations. Our paper uses the universe of German
employer-employee data subject to social security to take a firm-side perspective on parental leave.
We first document a strong relationship between the length of parental leave taken by mothers
and the availability of internal substitutes and external substitutes when limited parental leave
benefits are offered. We then show that this link reduces substantially with the introduction of a
parental leave reform granting generous wage replacements for up to 14 months after childbirth.
The reform caused a substantial negative short-run labour supply shock on pre-birth employers
as mothers’ probability to return to their pre-birth employer within the first year decreased substantially. Affected firms, especially with absences in small workgroups, cannot fully compensate the employment gap in the short-run. We find evidence that affected firms hire fewer women of
fertile ages in replacement hiring and subsequent hiring, suggesting that firms internalise the costs
of longer worker absences through their hiring decisions. As other groups are not affected, these
results provide support for statistical discrimination in the labour market against women.
Melissa S. Kearney,
University of Maryland
Kjell Gunnar Salvanes,
NHH Norwegian School of Economics
- J2 - Demand and Supply of Labor
- J1 - Demographic Economics