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The Implicit Costs and Benefits of Family Friendly Work Practices

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Author Info

  • Heywood, John S.

    ()
    (University of Wisconsin, Milwaukee)

  • Siebert, W. Stanley

    ()
    (University of Birmingham)

  • Wei, Xiangdong

    ()
    (Lingnan University)

Abstract

This paper posits that the provision of family friendly practices is, on balance, costly to firms and valuable to workers. As a consequence, we anticipate the emergence of a hedonic equilibrium in which workers provided with such practices face an implicit reduction in their earnings. Using WERS98 linked employer-employee data, we show that the ability to confirm this compensating wage differential depends critically on an appropriate treatment model designed to purge typical estimates of the income effect. We find that family friendly jobs may be associated with as much as a 20 percent reduction in earnings. Our estimates can be used to inform impact assessments of new UK legislation extending family friendly practices.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 1581.

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Length: 42 pages
Date of creation: May 2005
Date of revision:
Publication status: published in: Oxford Economic Papers, 2007, 59 (2), 275-300
Handle: RePEc:iza:izadps:dp1581

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Related research

Keywords: compensating wage differential; hedonic equilibrium; family friendly work practices; legislative impact assessment;

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References

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  1. John S. Heywood & Uwe Jirjahn, 2004. "Teams, Teamwork and Absence," Scandinavian Journal of Economics, Wiley Blackwell, Wiley Blackwell, vol. 106(4), pages 765-782, December.
  2. Morley Gunderson & Douglas Hyatt, 2001. "Workplace risks and wages: Canadian evidence from alternative models," Canadian Journal of Economics, Canadian Economics Association, Canadian Economics Association, vol. 34(2), pages 377-395, May.
  3. Keith A. Bender & Susan M. Donohue & John S. Heywood, 2005. "Job satisfaction and gender segregation," Oxford Economic Papers, Oxford University Press, vol. 57(3), pages 479-496, July.
  4. Helena Skyt Nielsen & Marianne Simonsen & Mette Verner, . "Does the Gap in Family-Friendly Policies Drive the Family Gap?," Economics Working Papers, School of Economics and Management, University of Aarhus 2003-1, School of Economics and Management, University of Aarhus.
  5. Deardorff, Alan V & Stafford, Frank P, 1976. "Compensation of Cooperating Factors," Econometrica, Econometric Society, Econometric Society, vol. 44(4), pages 671-84, July.
  6. Susan N. Houseman, 2000. "Why Employers Use Flexible Staffing Arrangements: Evidence from an Establishment Survey," Upjohn Working Papers and Journal Articles, W.E. Upjohn Institute for Employment Research 01-67, W.E. Upjohn Institute for Employment Research.
  7. Wood, Robert G & Corcoran, Mary E & Courant, Paul N, 1993. "Pay Differences among the Highly Paid: The Male-Female Earnings Gap in Lawyers' Salaries," Journal of Labor Economics, University of Chicago Press, University of Chicago Press, vol. 11(3), pages 417-41, July.
  8. Yoshio Higuchi & Jane Waldfogel & Masahiro Abe, 1999. "Family leave policies and women's retention after childbirth: Evidence from the United States, Britain, and Japan," Journal of Population Economics, Springer, Springer, vol. 12(4), pages 523-545.
  9. Cynthia L. Gramm & John F. Schnell, 2001. "The Use of flexible staffing arrangements in core production jobs," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 54(2), pages 245-258, January.
  10. Heckman, James J, 1978. "Dummy Endogenous Variables in a Simultaneous Equation System," Econometrica, Econometric Society, Econometric Society, vol. 46(4), pages 931-59, July.
  11. Jane Waldfogel, 1998. "Understanding the "Family Gap" in Pay for Women with Children," Journal of Economic Perspectives, American Economic Association, American Economic Association, vol. 12(1), pages 137-156, Winter.
  12. Duncan, Greg J & Stafford, Frank P, 1980. "Do Union Members Receive Compensating Wage Differentials?," American Economic Review, American Economic Association, American Economic Association, vol. 70(3), pages 355-71, June.
  13. Viscusi, W Kip, 1978. "Wealth Effects and Earnings Premiums for Job Hazards," The Review of Economics and Statistics, MIT Press, vol. 60(3), pages 408-16, August.
  14. Paul Lanoie & Francois Raymond & Bruce Shearer, 2001. "Work sharing and productivity: evidence from firm level data," Applied Economics, Taylor & Francis Journals, Taylor & Francis Journals, vol. 33(9), pages 1213-1220.
  15. John W. Budd & Karen Mumford, . "Trade Unions and Family Friendly Policies in Britain," Working Papers, Human Resources and Labor Studies, University of Minnesota (Twin Cities Campus) 0302, Human Resources and Labor Studies, University of Minnesota (Twin Cities Campus).
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Cited by:
  1. Heywood, John S. & Siebert, W. Stanley & Wei, Xiangdong, 2005. "High Performance Workplaces and Family Friendly Practices: Promises Made and Promises Kept," IZA Discussion Papers 1812, Institute for the Study of Labor (IZA).

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