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Parental Leave, Worker Substitutability, and Firms' Employment

Author

Listed:
  • Huebener, Mathias

    (Bundesinstitut für Bevölkerungsforschung (BiB))

  • Jessen, Jonas

    (IZA)

  • Kühnle, Daniel

    (University of Duisburg-Essen)

  • Oberfichtner, Michael

    (Institute for Employment Research (IAB), Nuremberg)

Abstract

Motherhood and parental leave are frequent causes of worker absences and employment interruptions, yet we know little about their effects on firms. Based on linked employer-employee data from Germany, we examine how parental leave absences affect small- and medium-sized firms. We show that they anticipate the absence with replacement hirings in the six months before childbirth. A 2007 parental leave reform extending leave absences reduces firm-level employment and total wages in the first year after childbirth, driven by firms with few internal substitutes for the absent mother. However, we do not find longer-term effects on firms' employment, wage-bill, or likelihood to shut down. We find that the reform increases replacement hirings, but firms directly affected do not respond to longer expected absences of mothers by subsequently hiring fewer young women. Overall, our findings show that extended parental leave does not have a lasting impact on firms when these can anticipate the absences.

Suggested Citation

  • Huebener, Mathias & Jessen, Jonas & Kühnle, Daniel & Oberfichtner, Michael, 2024. "Parental Leave, Worker Substitutability, and Firms' Employment," IZA Discussion Papers 16843, Institute of Labor Economics (IZA).
  • Handle: RePEc:iza:izadps:dp16843
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    References listed on IDEAS

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    1. Bamieh, Omar & Ziegler, Lennart, 2023. "Gender-age differences in hiring rates and prospective wages—Evidence from job referrals to unemployed workers," Labour Economics, Elsevier, vol. 83(C).

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    More about this item

    Keywords

    parental leave; worker absences; worker substitutability;
    All these keywords.

    JEL classification:

    • J16 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Gender; Non-labor Discrimination
    • J18 - Labor and Demographic Economics - - Demographic Economics - - - Public Policy
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity

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