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On the Effect of Parental Leave Duration on Unemployment and Wages

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  • Elena Del Rey
  • Maria Racionero
  • Jose I. Silva

Abstract

We introduce parental leave policies in a labour search and matching model and study the e¤ect of leave duration on unemployment and wages. We show that the e¤ects are ambiguous and depend on whether the ratio of wage bargaining power of employer relative to worker is higher or lower than the ratio of the net value of the leave for employer relative to worker. Our theoretical results suggest that simulated labour market outcomes in search and matching models may be sensitive to the calibration of key parameters that we identify.

Suggested Citation

  • Elena Del Rey & Maria Racionero & Jose I. Silva, 2017. "On the Effect of Parental Leave Duration on Unemployment and Wages," CEPR Discussion Papers 698, Centre for Economic Policy Research, Research School of Economics, Australian National University.
    • Handle: RePEc:auu:dpaper:698
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    File URL: https://www.cbe.anu.edu.au/researchpapers/CEPR/DP698.pdf
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    References listed on IDEAS

    as
    1. Andres Erosa & Luisa Fuster & Diego Restuccia, 2010. "A General Equilibrium Analysis of Parental Leave Policies," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 13(4), pages 742-758, October.
    2. Olivier Thévenon & Anne Solaz, 2013. "Labour Market Effects of Parental Leave Policies in OECD Countries," OECD Social, Employment and Migration Working Papers 141, OECD Publishing.
    3. David Card & Ana Rute Cardoso & Patrick Kline, 2016. "Bargaining, Sorting, and the Gender Wage Gap: Quantifying the Impact of Firms on the Relative Pay of Women," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 131(2), pages 633-686.
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    Cited by:

    1. Francesca Barigozzi & Helmuth Cremer & Emmanuel Thibault, 2024. "The motherhood wage and income traps," Journal of Population Economics, Springer;European Society for Population Economics, vol. 37(4), pages 1-26, December.
    2. Del Rey, Elena & Racionero, Maria & Silva, Jose I., 2024. "Employer vs government parental leave: Labour market effects," Economic Modelling, Elsevier, vol. 136(C).
    3. Miyazaki, Koichi, 2019. "Optimal paid job-protected leave policy," MPRA Paper 96223, University Library of Munich, Germany.
    4. Del Rey, Elena & Racionero, Maria & Silva, Jose I., 2021. "Labour market effects of reducing the gender gap in parental leave entitlements," Labour Economics, Elsevier, vol. 72(C).
    5. Alessandra Casarico & Elena Del Rey & Jose I. Silva, 2023. "Child care costs, household liquidity constraints, and gender inequality," Journal of Population Economics, Springer;European Society for Population Economics, vol. 36(3), pages 1461-1487, July.
    6. Barigozzi, Francesca & Cremer, Helmuth & Roeder, Kerstin, 2018. "Women's career choices, social norms and child care policies," Journal of Public Economics, Elsevier, vol. 168(C), pages 162-173.
    7. Spencer Bastani & Tomer Blumkin & Luca Micheletto, 2019. "The Welfare-Enhancing Role of Parental Leave Mandates," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 35(1), pages 77-126.
    8. Miyazaki, Koichi, 2023. "Efficiency-enhancing role of mandatory leave policy in a search-theoretic model of the labor market," MPRA Paper 116614, University Library of Munich, Germany.
    9. Miyazaki, Koichi, 2021. "A theory of optimal paid parental leave policies," MPRA Paper 109035, University Library of Munich, Germany.

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    Keywords

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    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy

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