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Employer Responses to Family Leave Programs

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Abstract

Search frictions make worker turnover costly to firms. A three-month parental leave expansion in Sweden provides exogenous variation that we use to quantify firms’ adjustment costs upon worker absence and exit. The reform increased women’s leave duration and likelihood of separating from pre-birth employers. Firms with greater exposure to the reform hired additional workers and increased incumbent hours, incurring additional wage costs. These adjustment costs varied by firms’ availability of internal and external substitutes. Economy-wide analyses show that a higher reform exposure is correlated with fewer hires and lower starting wages of young women compared to men and older women.

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  • Ginja, Rita & Karimi, Arizo & Xiao, Pengpeng, 2020. "Employer Responses to Family Leave Programs," Working Papers in Economics 6/20, University of Bergen, Department of Economics.
  • Handle: RePEc:hhs:bergec:2020_006
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    Cited by:

    1. Huebener, Mathias & Jessen, Jonas & Kühnle, Daniel & Oberfichtner, Michael, 2021. "A Firm-Side Perspective on Parental Leave," IZA Discussion Papers 14478, Institute of Labor Economics (IZA).
    2. Bartel, Ann P. & Rossin-Slater, Maya & Ruhm, Christopher J. & Slopen, Meredith & Waldfogel, Jane, 2021. "The Impact of Paid Family Leave on Employers: Evidence from New York," IZA Discussion Papers 14262, Institute of Labor Economics (IZA).
    3. Schmutte, Ian M. & Skira, Meghan M., 2020. "The Response of Firms to Maternity Leave and Sickness Absence," GLO Discussion Paper Series 691, Global Labor Organization (GLO).

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    More about this item

    Keywords

    Parental Leave; Firm-Specific Human Capital; Statistical Discrimination;
    All these keywords.

    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
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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