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Maternity leave and labour market outcomes

Author

Listed:
  • Banerjee, Purna
  • Biswas, Shreya
  • Mazumder, Debojyoti

Abstract

Using a triple difference estimation strategy, we compare the labour market outcomes of men and women before and just after the implementation of extended maternity leave policy across age profiles of individuals, in India. We find a negative impact of the maternity leave extension policy on the employment of women in high-fertility age cohorts. To explain this intuitively, we adapt a stylized micro-founded model of life-cycle search and matching friction in a gendered environment where the additional cost burden of maternity leave is borne by the firms, as is the case in India. We argue that if the firm’s cost from longer maternity leave duration outweighs the gain from retaining a worker, then the probability of being employed for fertile-age female workers decreases; via increased reservation productivity and decreased market tightness. Our empirical results and theoretical framework underscore the fact that even a well-intended policy design must be cognizant of underlying labour market dynamics to avoid exacerbating gender differences in labour markets.

Suggested Citation

  • Banerjee, Purna & Biswas, Shreya & Mazumder, Debojyoti, 2026. "Maternity leave and labour market outcomes," Journal of Economic Behavior & Organization, Elsevier, vol. 247(C).
    • Handle: RePEc:eee:jeborg:v:247:y:2026:i:c:s0167268126001885
    DOI: 10.1016/j.jebo.2026.107602
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    Keywords

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    JEL classification:

    • J13 - Labor and Demographic Economics - - Demographic Economics - - - Fertility; Family Planning; Child Care; Children; Youth
    • J16 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Gender; Non-labor Discrimination
    • J18 - Labor and Demographic Economics - - Demographic Economics - - - Public Policy
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search

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